Oil up, but Stockpiles Look to Build and Texas Cuts Plan ‘Dead’

Commodities & Futures
© Reuters.  © Reuters.

By Barani Krishnan

Investing.com – Oil prices ended up on Monday, but the market could have trouble extending its gains after an industry regulator for Texas declared “dead” a plan to cut output in the largest oil-producing state in the U.S.

Forecasts that the Energy Information Administration will report fairly largely weekly builds for , and in its routine dataset due on Wednesday could also weigh on the more-than-60% recovery seen on the West Texas Intermediate crude benchmark over the past four sessions.

“We need some real hard bullish numbers to backstop these gains, and so far I haven’t seen those,” said Gene McGillian. vice president of research at Tradition Energy in Stamford, Conn. 

New York-traded settled up 61 cents, or 3%, at $ 20.39 per barrel, after hitting a three-week high of $ 21.41 earlier. 

U.K.-traded , the global benchmark for oil, finished up 76 cents, or nearly 3% higher, at $ 27.20. It hit $ 28 at the session high. 

For the year though, WTI remains down 65%, while is Brent nearly 60% lower.

A Texas regulator who had proposed mandating a 20% production cut amounting to 1 million barrels in the state are now calling those efforts “dead” a day before the state was set to vote on the measure, Bloomberg reported.

Texas Railroad Commissioner Ryan Sitton predicted in an interview that curtailing production in a process known as “pro-rationing” would fail to get the support needed from the three-member agency when a vote on the matter is taken in Houston on Tuesday.

The Texas cuts plan was pushed aggressively by Sitton and two oil drilling companies in the state — Parsley Energy (NYSE:) and Pioneer Natural Resources (NYSE:) — amid this year’s crash in crude prices forced by the coronavirus pandemic. 

The plan was resisted by companies such as Exxon Mobil (NYSE:), Chevron (NYSE:) and Marathon Oil (NYSE:), who argued Texas drillers were on track to cut capital expenditure on oil search and drilling by as much as 50% this year. The companies seemed to have the tacit backing of two other panel members of the Texas Railroad Commission, Chairman Wayne Christian and Christi Craddick. 

As for the EIA’s weekly report due on Wednesday, a consensus of analysts tracked by Investing.com are forecasting a crude build of 10.6 million barrels for the week ended May 1, versus the previous week’s build of 9 million barrels.

Gasoline inventories are expected to have risen by 2.5 million barrels versus the previous week’s decline of 3.7 million. Distillate stockpiles are, meanwhile, expected to have risen by 3.6 million barrels, adding to the previous week’s 5-million-barrel build.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Let’s block ads! (Why?)

Commodities & Futures News

Leave a Reply

Your email address will not be published. Required fields are marked *