Crude prices pared losses after the EIA crude oil inventory report posted a surprise draw as exports came in impressively strong. So much to take from this mixed EIA oil inventory report. Gasoline demand was surprisingly much softer-than-expected, which helped send futures lower. Gasoline inventories rose 3.5 million barrels, much more than the expected 961,000 consensus estimate.
US production dipped 100,000 bpd, which brought the output total to 11.9 million bpd. Despite tremendous demand and political pressure for more barrels of crude, production appears like it can’t break past the 12 million bpd mark. What will also catch a lot of attention is that the Strategic Petroleum Reserve drew 5 million bpd, sending holdings to the lowest levels since July 1985. The oil market just doesn’t have enough spare capacity (thank you Saudi Arabia for revealing your ceiling) that even with whatever demand destruction we are seeing, oil prices should find a home above the $100 a barrel level.
Important to note was the beginning of actions from the White House on wind and heat. Aggressive action to tackle climate change should lead to more investment in clean energy, which further cements how tight the oil market will remain over the next decade. President Biden won’t cripple the oil industry as the global energy crisis has become desperate for crude oil.
Gold edges lower
Gold prices resumed their bearish trend as ETF holdings continue their steady decline. The risks to global growth outlook remain elevated and that should keep the dollar supported over the short-term, which is a troubling environment for gold.
Gold is slightly down as the dollar’s short slump might be over. If king dollar heats up again, the $1650 level might not provide much support. If redemptions remain elevated for gold, further short-term pressure could remain.