The market took a dive yesterday afternoon, but rebounded early this morning and is still trying to regain some ground. Yesterday the market closed down, front month HO down $0.0301 to $1.3648/gal, front month RBOB down $0.0135 to $1.4105/gal, and WTI Crude down $0.70 to $42.53/bbl.
Yesterday, WTI closed down $0.97 to $43.23/bbl, HO closed down $0.0162 to $1.3949/gal, and RBOB finished down $0.0266 to $1.4240/gal. The market has been relatively flat since the release of the mixed API statistics last night. Crude inventories drew 2.7 million barrels, 1.3 million coming from Cushing, OK. Imports were down 978,000 bpd. Refined products were bearish; gasoline had a small build of 346,000 barrels, and distillates built by 1.8 million barrels.
Those who believe that the bears are here to stay are buying into the sell-off this morning. As of 10:45 a.m., distillates and RBOB are trading down near 3 cents, while WTI crude sits right under $43 dollars per barrel. Those who like looking at graphs can see below that WTI crude just hit its lowest point since November of last year. What was so significant about the month of November you ask? Let me take you back in time.
Many people have many different ways to view the number 22 around the world. It is said that the number 22, according to The Numerology, is the “most powerful of all numbers, able to turn lofty dreams into realities. It is confident, pragmatic, ambitious and disciplined.” Here in the U.S. the number 22 does represent ambition and confidence as we see yet another week of rig count increases despite the price per barrel trading near $45 a barrel. Twenty two straight weeks of rig count growths marks the lengthiest stretch in nearly three decades. The key question everyone is asking is how low does the price per barrel need to drop before we see a plateau in rig counts. Or the flip side of the coin on that question is how much forward production was hedged by U.S. producers and how far out in the future? At what point do new efficiencies in drilling lose the battle to the declining cost of oil? The U.S. upped its rig count by seven last week, bringing the total to 747. The natural gas rig count rose by one to a total of 186. This brings our total rig count to 933, with U.S. production expanded to 9.33 million barrels per day.