The API, American Petroleum Institute, in its latest
forecast, indicates a significant crude oil draw for the week ending June 10. The
same from the EIA, the US Energy Information Administration, is yet to be
released for the same period.
The API figure, 8.573 million barrels, is more than
twice what the analysts were expecting for the same period – 3.29 million barrels.
Although the forecasts by the analysts and the API
used to diverge somewhat occasionally, in the previous week the figures came
very close; the forecasts by the API and those of the EIA too used to diverge
from each other on some occasions.
The inventory draws by the EIA in the recent past
clearly show that the demand of crude oil is on the rise steadily; its
consistency may have given fresh hopes for the beleaguered oil producers to be
back in the business with a high degree of certainty, having been battered for
months due to falling oil price.
The cumulative draw of US crude oil inventories
stand at 22 million barrels since the beginning of this year.
A weekly inventory draw of this size, over 8 million
barrels, will definitely clear the fog of uncertainty surrounding the Iran’s
possible entry into the crude oil markets; the signatories to the JCPOA, 2015
Iran nuclear deal, are currently having their sixth rounds of talks in Vienna,
Austria, in order to hammer out a deal; the signals that come in dribs and
drabs have been mixed so far, mimicking a buoy in the high seas – fluctuating between
hope and despair.
The success of vaccine rollout, both in the US and
Europe, has strengthened the positive sentiments in the market without letting
the latter being eclipsed by random outbreaks. The past experiences show they
are manageable with short lockdowns and intense social-distancing measures.
The market sentiment got yet another boost this week
as India reported that the Coronavirus infections are on decline – for two
successive weeks.
The price of crude oil suffered when India, the third
largest consumer of the commodity, suffered a devastating second wave of the
pandemic. The authorities, however, have learned the lessons and are preparing
themselves for a potential third wave – with more forward planning this time,
without any room for misplaced complacency.
All in all, the mood in the crude oil markets is
infectiously positive at present, provided that the outcome from the talks on
the JCPOA in Vienna does not spoil the party!
