Surprise Build in Crude Oil Inventories
A surprise build in crude oil inventories as reported by the American Petroleum Institute weighed on energy prices yesterday afternoon. The Institute is estimating a 1.4 million barrel build in crude stocks last week along with a build in gasoline and draw in diesel of +1.9 million barrels and -2.2 million barrels respectively. Despite diesel’s drawdown, the complex is selling off this morning losing 1.5%-2% across the board.
A trio of tropical systems, all in different stages of hurricane progression, are churning in the Atlantic basin. Post-hurricane tropical storm Jerry is expected to stay out to sea and hit Bermuda later tonight while Hurricane Lorenzo is expected to upgrade into a major hurricane by Thursday out in no-man’s-land in the Mid-Atlantic. Tropical storm Karen seems to be the system to watch as it’s forecasted to head north and hook west towards an already battered Bahamas. Another system has popped up in the southern Gulf of Mexico but odds are low (10%) of it organizing in the next 5 days.
Markets seem to be taking a risk-off approach in light of dual headlines sparking concerns of global political and economic turmoil:
The European Manufacturing PMI, the index used to quantify general sentiment in manufacturing and service sectors of the economy, has reached an 83-month low, the lowest level in nearly seven years.
The Democrats of US Congress have formally launched a presidential impeachment inquiry. While an impeachment seems unlikely, the process itself could impede any progress on a resolution to the US-China trade war.
The EIA’s weekly inventory report is due out at 9:30am CDT. A contrary draw down in crude stocks could help stem off further selling but for now the market seems content fading lower this morning amid bearish sentiment.
Click here to download a PDF of today's TACenergy Market Talk.
Latest Posts
Week 48 - US DOE Inventory Recap
The API Reported Gasoline Inventories Dropped By 898,000 Barrels Last Week
Values For Space On Colonial’s Main Gasoline Line Continue To Drop This Week
After Another Black Friday Selloff Pushed Energy Futures Sharply Lower In Last Week’s Holiday-Shortened Trading
Social Media
News & Views
View All
Week 48 - US DOE Inventory Recap
The API Reported Gasoline Inventories Dropped By 898,000 Barrels Last Week
Gasoline and oil prices are attempting to rally for a 2nd straight day, a day ahead of the delayed OPEC meeting, while diesel prices are slipping back into the red following Tuesday’s strong showing.
The API reported gasoline inventories dropped by 898,000 barrels last week, crude inventories declined by 817,000 barrels while distillates saw an increase of 2.8 million barrels. Those inventory stats help explain the early increases for RBOB and WTI while ULSD is trading lower. The DOE’s weekly report is due out at its normal time this morning.
A severe storm on the Black Sea is disrupting roughly 2% of the world’s daily oil output and is getting some credit for the bounce in futures, although early reports suggest that this will be a short-lived event.
Chevron reported that its Richmond CA refinery was back online after a power outage Monday night. San Francisco spot diesel basis values rallied more than a dime Tuesday after a big drop on Monday following the news of that refinery being knocked offline.
Just a few days after Scotland’s only refinery announced it would close in 2025, Exxon touted its newest refinery expansion project in the UK Tuesday, with a video detailing how it was ramping up diesel production to reduce imports and possibly allow for SAF production down the road at its Fawley facility.
Ethanol prices continue to slump this week, reaching a 2-year low despite the bounce in gasoline prices as corn values dropped to a 3-year low, and the White House appears to be delaying efforts to shift to E15 in an election year.
Click here to download a PDF of today's TACenergy Market Talk.
Values For Space On Colonial’s Main Gasoline Line Continue To Drop This Week
The petroleum complex continues to search for a price floor with relatively quiet price action this week suggesting some traders are going to wait and see what OPEC and Friends can decide on at their meeting Thursday.
Values for space on Colonial’s main gasoline line continue to drop this week, with trades below 10 cents/gallon after reaching a high north of 18-cents earlier in the month. Softer gasoline prices in New York seems to be driving the slide as the 2 regional refiners who had been down for extended maintenance both return to service. Diesel linespace values continue to hold north of 17-cents/gallon as East Coast stocks are holding at the low end of their seasonal range while Gulf Coast inventories are holding at average levels.
Reversal coming? Yesterday we saw basis values for San Francisco spot diesel plummet to the lowest levels of the year, but then overnight the Chevron refinery in Richmond was forced to shut several units due to a power outage which could cause those differentials to quickly find a bid if the supplier is forced to become a buyer to replace that output.
Money managers continued to reduce the net length held in crude oil contracts, with both Brent and WTI seeing long liquidation and new short positions added last week. Perhaps most notable from the weekly COT report data is that funds are continuing their counter-seasonal bets on higher gasoline prices. The net length held by large speculators for RBOB is now at its highest level since Labor Day, at a time of year when prices tend to drop due to seasonal demand weakness.
Click here to download a PDF of today's TACenergy Market Talk.