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  • WTI flatlined around $58.40 into the 22:00GMT futures market close despite a bullish API inventory report.
  • But WTI still managed its seventh day of gains as the underlying fundamental picture remains bullish.

Front-month futures prices for the American benchmark for sweet light crude, West Texas Intermediary (or WTI), was little changed in wake of a bullish weekly API private inventory report released just after 21:30GMT. Market conditions are thin ahead of the start of the Asia Pacific session and WTI flatlined around the $58.40 mark prior to the 22:00GMT futures market close, around 20 cents away from 13-month highs just above $58.60. Futures markets reopen at 23:00GMT and volume should start to pick up a little again.

Driving the day

WTI ended the CME trading pit session (which ends at 19:30GMT) up 39 cents at $58.36, marking a seventh straight day of gains. Gains on Tuesday were comparatively more modest than during the prior six days and trade was comparatively choppier; in the immediate aftermath of the CME crude oil pit open at 14:00GMT (which typically sees a pick-up in volatility), WTI dropped as low as the $57.20s, down 1.3% at worst levels. However, bulls were keen to buy the dip as markets continue to sing the same old bullish narrative; more US stimulus plus rapid vaccine rollouts mean an aggressive global recovery in demand is incoming, meanwhile, OPEC+ and the Saudis seem keen to keep market conditions tight with their impressive flexibility.

Elsewhere, in its latest monthly Short Term Energy Outlook report, the EIA cut its forecast for 2021 world oil demand growth by 180K barrels per day to 5.38M YoY but raised its forecast for 2022 demand growth by 190K barrels per day to 3.5M YoY. More bullishly, the report downgraded its forecast for US production in 2021 to a decline of 290K barrels per day (meaning it sees average US daily output at 11.02M barrels in 2021), a larger decline than the previously forecast decline of 190K barrels per day.

Bullish Weekly API Report

This week’s just-released API report, which tracks changes in energy inventories in the week ending on 1 February, was a bullish one for crude oil, with crude oil inventories posting a surprise 3.5M barrel draw versus expectations for a 1M build. Traders now await confirmation from the US Energy Information Administration (EIA) on Wednesday, who release their official weekly inventory report. Perhaps the bullish impulse of the surprise draw was negated by a much larger than expected build in gasoline inventories of 4.8M barrels (versus expectations for a more modest build of 1.8M barrels).

On the face of it, however, Tuesday’s API report suggests a continuation of the recent trend of declining US crude oil inventories amid tighter oil market conditions than expected (demand in the US seems to have held up better than expected).