Oil futures: Prices consolidate weekly gains, ease from highs following stock data

Quantum Commodity Intelligence - Crude oil futures Wednesday were slightly lower on the day but largely consolidating the week's firm gains as potential supply shortfalls continued to dominate, although prices retreated following the delayed release of US oil data.

Front-month August ICE Brent futures were trading at $117.36/barrel (1740 GMT), compared to the day's high of $120.41/b and Tuesday's settle of $117.98/b. The more liquid Sep22 contract was trading at $113.71/b versus the previous close of $113.80/b.

At the same time, August NYMEX WTI was trading $111.16/b, versus Tuesday's settle of $111.76/b.

After France's President Macron let slip earlier this week that he had been told both the UAE and Saudi Arabia were almost maxed out on production, prices have largely been in an upwards trend, while the latest OPEC+ figures revealed the group is falling even further behind with targets.

The group's compliance rate against previously-announced cuts was 256% in May as collective production slumped to 2.7 million bpd under target, according to data prepared by the Joint Technical Committee.

Wednesday's OPEC meeting was said to have focussed on administrative matters, while the wider OPEC+ meeting scheduled for Thursday will look at policy beyond August.

Crude also found support after Libya's state-owned NOC declared force majeure at the oil terminals of Es Sider and Ras Lanuf due to ongoing protests, while Ecuador warned this week that its oil production was on the brink of collapse. 

Inventory

Prices, however, dipped from highs after the US Energy Information Administration reported a crude stocks draw of 2.8 million barrels for the week to June 24, less than API figures, while the delayed report for the week ending June 17 showed the largest inventory build since February at 5.6 million barrels.

Meanwhile, the release rate from the Strategic Petroleum Reserve is at close to 1 million bpd, in line with the plan to sell 180 million barrels over six months. 

The American Petroleum Institute (API) reported late Tuesday that US commercial crude inventories fell by 3.8 million barrels last week. Gasoline stocks were up by 2.85million barrels, while distillate inventories increased by 2.61 million barrels.

Goldman Sachs gave a further bullish outlook, telling CNBC that oil prices will reach $140/b over the summer. The bank's chief commodities strategist, Jeff Currie, said the price pullbacks earlier this month were a buying opportunity and that under-investment continues to drive oil.

"The situation across the energy space is incredibly bullish right now… ultimately, the only way you're solving these problems is through increased investments," said Currie.

Taking the opposite viewpoint, Citibank's Ed Morse was forecasting $75/b Brent in 2023 and under $50/b after that.

Morse said in the bank's latest report that the oil market is "looser" than OECD inventories indicate following stock builds in China during Q2, while the US bank believes that Q4 will see more than 2 million bpd of inventory builds.

Citi also sees in Q1 2023 Iran ramping up production, while US growth will accelerate by 1.8 million bpd for all liquids in 2023.