Sector Update: Tech

Update: WTI Crude Oil Falls as the IEA Sees Global Inventories Dropping at a Record Pace

West Texas Intermediate (WTI) crude oil closed lower on Wednesday but stuck above US$100 as the loss of Persian Gulf supply since the start of the war on Iran cuts into stocks, with the International Energy Agency (IEA) reporting a a record draw down in inventories since the conflict began.WTI crude oil for June delivery closed down US$1.02 to settle US$101.02 per barrel, while July Brent oil was last seen down US$1.98 to US$105.79.Oil prices have climbed by more than half since the United States and Israel launched their war on Iran on Feb. 28. Iran responded by closing the Strait of Hormuz, trapping in 20% of daily oil supply produced by Persian Gulf nations.In its closely watched monthly Oil Market Report, the IEA said the loss of Persian Gulf supply is depleting global inventories at a record pace."With Hormuz tanker traffic still restricted, cumulative supply losses from Gulf producers already exceed 1 billion barrels with more than 14 mb/d of oil now shut in, an unprecedented supply shock," the agency said.The IEA said the supply disruption and high prices will cut into demand, expecting a global demand drop of 420,000 barrels per day this year to 104-million bpd, down 1.3-million bpd from its pre-war forecast.Inventories fell by 129-million bpd in March and by 117-million bpd in April, though rising output from producers outside of the Gulf is helping to ease the supply shock."2026 supply growth expectations from the Americas have been revised up by more than 600 kb/d since the start of the year, to 1.5 mb/d on average. Moreover, Atlantic Basin crude oil exports, now heading primarily to hard-hit East of Suez markets, have increased by 3.5 mb/d since February, with notable gains from the United States, Brazil, Canada, Kazakhstan and Venezuela," the IEA noted.In its weekly survey, the Energy Information Administration reported U.S. commercial oil inventories fell by 4.3-million barrels last week, while the consensus estimate among analysts polled by Reuters expected a drop of 2.9-million barrels.

June WTI Crude Oil Contract Closes Down US$1.16; Settles at US$101.02 per Barrel

Sector Update: Energy Stocks Softer Wednesday Afternoon

Energy stocks were lower Wednesday afternoon, with the NYSE Energy Sector Index decreasing 0.4% and the State Street Energy Select Sector SPDR ETF (XLE) easing 0.2%.The Philadelphia Oil Service Sector Index was down 0.7%, and the Dow Jones US Utilities Index was falling 1.1%.Front-month West Texas Intermediate crude oil was declining 0.4% to $101.81 a barrel, and the global benchmark Brent crude contract was dropping 1.4% to $106.24 a barrel. Henry Hub natural gas futures rose 0.9% to $2.87 per 1 million BTU.In sector news, the International Energy Agency on Wednesday forecast a sharper decline in global oil demand this year than previously expected as the Middle East conflict drives up energy prices. The agency anticipates oil consumption to contract by 420,000 barrels a day in 2026, compared with an 80,000-barrel drop expected last month. Oil demand is projected to plunge by 2.45 million barrels per day in the second quarter.Separately, US crude oil stocks, including those in the Strategic Petroleum Reserve, fell by 12.9 million barrels in the week ended May 8 following a decrease of 7.5 million barrels in the previous week. Excluding inventories in the SPR, commercial crude oil stocks decreased by 4.3 million barrels after a 2.3-million-barrel decline in the previous week, more than the 2.0-million-barrel decrease expected in a survey compiled by Bloomberg.In corporate news, BP (BP) has stopped contract discussions with the US steelworkers' union after the lockout of over 800 employees at its Whiting, Indiana, facility, Reuters reported, citing a statement from the union. BP shares were down 0.9%.Ring Energy (REI) shares dropped 25% after the company overnight said it priced a public offering of about 44.4 million common shares at $1.35 apiece, targeting $60 million in gross proceeds.Equinor (EQNR) plans to hold talks with major European customers on whether they would support ambitious and expensive new projects to recover oil and gas supplies, Bloomberg reported. Equinor shares fell 1.2%.