Crude, Refined Products See Modest Gain

Thursday, September 6, 2018

Crude oil and refined products futures are seeing modest gains amid a blockade at an Iraqi port and a dip in the US dollar index, but despite neutral to unsupportive inventory data from the American Petroleum Institute and disappointing manufacturing orders data from Germany. Global stock markets were mixed, ahead of data on the US labor market and service sector.

API reported a 1.17-million-barrel draw from US commercial crude oil stockpiles for the week, slightly under the 1.30 mb predicted by analysts, with refinery runs rising by 0.20 mb/d. Crude stocks went the other direction, up by 0.63mb. Refined product stocks saw builds last week, with gasoline up 1.00mb against expectations for a 0.81mb draw, and heating oil stocks up by 1.80mb – topping the 0.74mb forecast.

In supportive supply-side news, Reuters reports that protesters have blocked the entrance to the Umm Qasr commodities port in Iraq, demanding better services. Despite most of Iraq’s oil wealth being produced in the south, the region suffers from unemployment and electricity outages, and Basra residents say salt has seeped into the water supply.

Supportive for oil prices, the US dollar was depreciating slightly against a basket of currencies this morning. Meanwhile, global equity indexes were trading mixed. Data from Germany were unsupportive, as manufacturing orders shrank 0.9% unexpectedly in July – orders had been expected to grow by 2.1%. Market participants looked ahead to a raft of US economic data for further direction, largely focused on the labor market and the service sector, including the Challenger Job-Cut Report, ADP employment report, weekly jobless claims, the Markit Services PMI, the ISM non-manufacturing index, as well as productivity and costs and factory orders.

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