As Monday’s crude prices came to a settle, it has become clear that last week’s market surge was unrelated to market fundamentals. “Technically” speaking yesterday’s price drop was driven by technicals and the situation in Syria. The market is somewhat flat as of 10:45 AM ET, for both diesel and gasoline, with crude up .50. The crude bounce is on the dollar drop and the oversold market yesterday.
Market analysts at Genscape, a leading provider of date intelligence in commodity markets, forecasted a 1.1 million bbl build in Cushing, Oklahoma, where WTI is delivered. A preliminary Reuters poll indicates a U.S. crude inventory build of 2.8 million bbls, while diesel and gasoline inventories are forecasted to draw 1.7 million bbls. If this data is confirmed, it will be the third weekly increase of crude inventories in a row.
As the chart indicates, the U.S. is flush with crude, compared to the last year and several years prior. It has fallen off slightly from the 1st quarter, but has flatlined since.
In world news, China’s exports dropped by 3.7%, significantly less than the expectation of a 6.3% drop by Reuters. The country’s trade balance has grown over the last 2 months, but at this pace it is likely going to miss it’s 7% growth target, which would increase worries about the global economy.