American Petroleum Institute will release its weekly inventory report 4:30 p.m. EST, followed by official supply data from the U.S. Energy Information Administration at 10:30 a.m. EST on Wednesday.
U.S. crude oil production is unlikely to recover to its pre-pandemic level this year, according to the EIA’s Short-Term Energy Outlook released Tuesday afternoon. The agency estimates output will average 11.1 million barrels per day (bpd) in 2021 after slumping to 11.3 million bpd in 2020 from a record high annual average rate of 12.2 million bpd in 2019. The agency also revised lower production from the Organization of the Petroleum Exporting Countries for the remainder of the year, mainly driven by a unilateral cut of 1 million bpd announced by Saudi Arabia on Jan. 5. As a result, global oil inventories are seen trending lower this year, declining at a rate of 600,000 bpd and 500,000 bpd in 2022.
On the demand side, the agency cut its 2021 forecast by 390,000 bpd from its previous estimate to 97.77 million bpd — still far below the pre-pandemic level. The declines are mostly attributed to protracted weakness in the aviation sector and continued mitigation efforts to curb the viral spread in countries that are part of the Organization for Economic Cooperation and Development. For 2022, global oil demand is projected to return to 101.08 million bpd, with growth in non-OECD countries accounting for 55.03 million bpd.
On the session, NYMEX WTI for February delivery rallied 96 cents to $53.21 bbl and the March Brent contract on ICE climbed 92 cents to $56.58 bbl. NYMEX February ULSD futures added 2.32 cents to $1.5967 gallon, with the front-month RBOB contract advancing 3.22 cents to $1.5530 gallon.
In outside markets, U.S. equities posted modest gains in afternoon trade Tuesday, likely drawing support from expectations of a new stimulus package set to be unveiled by President-elect Joe Biden on Thursday (1/14). The price tag is reportedly in trillions of dollars and would include a $2,000 stimulus check for most Americans, broad funding for vaccination programs, and an increase in the federal minimum wage to $15 an hour. Markets seemed to shrug at growing political uncertainty ahead of Biden’s inauguration on Jan. 20, with a State of Emergency declared in Washington, D.C. The Pentagon has called up 10,000 troops for deployment to the capital.
Liubov Georges can be reached at firstname.lastname@example.org