Overnight the API announced that US crude oil inventories rose by a significant 12.5MMbbls over the last week. Counteracting this were large drawdowns in both gasoline and distillate fuel oil inventories, with these falling by 8.5MMbbls and 4.8MMbbls, individually.
This data reveals the outcome of the big freeze that we witnessed across the US Gulf in February, with refiners taking longer to get back up and going.
Uniting with the US and the EIA’s latest Short Term Energy Outlook detected some comprehensive revisions in their production estimates for US oil production.
The EIA now assumes that 2021 US oil production will decrease by just 173Mbbls/d YoY to average 11.14MMbbls/d, related to a previous projection of 11.02MMbbls/d. Nevertheless, more extensive revisions were moved to 2022. The EIA now requires that oil production next year increase by about 880Mbbls/d YoY to average a little above 12MMbbls/d. This relates to a previous estimate of 11.53MMbbls/d.
Metals
The copper/gold ratio dropped between a pullback in US 10 year yields. Copper does not appear to be very sensitive to the USD’s softness, with profit-taking pushing the market below. Alternatively, the market seems to be sensing some likely changes in policy tone from China’ Two Sessions’, and there are reports on de-leveraging and potentially more moderate credit growth.
Meantime, looking at fundamentals, spot treatment charges prevailed under pressure, with them failing to nearly US$36/t. On mine supply, Chile’s export value rose in February, after weak shipments in January due to disturbances at ports, which may grant relief to smelters.
Meantime, Peru’s mines minister assumes the nation’s copper production to enter a record of 2.5mt in 2021, significantly higher than the 2.15mt created last year.
Agriculture
The most advanced WASDE report from the USDA notes that the agency left measures for US ending stocks and US production consistent from last month for both corn and soybeans.
The market had been anticipating the USDA to revise lower their ending stock ratings. Meantime, looking at global balances, the USDA updated higher international ending stock assessments by a little over 1.1mt to stand at 287.67mt, on the back of slightly stronger output.
For soybean, revisions higher to the Brazilian crop indicated that global ending stocks for 2020/21 also edged marginally higher to 83.74mt (up 380kt MoM).
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