Oil: Uncertainty over the outlook for tariffs – ING

Oil prices continued to trend lower yesterday amid uncertainty over the outlook for tariffs, a dynamic overshadowing sanction risks. After imposing additional sanctions on Iran’s oil industry, the Trump administration is now eyeing Venezuela, ending Chevron’s licence to operate in the South American nation, ING’s commodity analysts Warren Patterson and Ewa Manthey notes.

Strong refinery activity is behind the drop in inventories

"Previously, Chevron was allowed to operate there and, despite sanctions, export crude to the US. This development has boosted differentials for medium sour crude grades, such as Mars Blend. Its differential jumped by more than US$1/bbl to US$1.71/bbl. US imports of Venezuelan crude oil have averaged almost 270k b/d so far this year."

"US Energy Information Administration (EIA) weekly inventory data were fairly neutral. Over the last week, US commercial crude oil inventories fell by 2.33m barrels, the first decline in stocks since mid-January. It’s also the largest decline in inventories since December."

"Strong refinery activity is behind the drop in inventories; refiners increased their utilisation rates by 1.6pp week on week. However, we only saw a marginal build in gasoline stocks, which rose 369k barrels. A stronger build was seen in distillate inventories, which grew by 3.91m barrels."