The EIA’s Weekly Petroleum Status Report was released yesterday. The big news coming out of the report was the draw of 4.2 million bbls of crude inventories. Expectations were that the draw would be much lower. The report also noted that refinery utilization dropped by 0.4% after hitting a decade high last week. The EIA stated that for refined products, gasoline drew 0.4 million bbls and distillate rose by 2.6 million bbls. Driving season is in full swing and the four-week demand for gasoline is running 6.2% ahead of what was seen in July 2014. Distillate has shown a different story, as demand has fallen but there is carry in the market and it pays to store product. This could be contributing to exports being off overall on distillates, as refiners are choosing not to export. These factors are contributing to the highest distillate inventory numbers in five years. The overall market has reacted by strengthening the last two days with WTI pushing back toward fifty dollars per barrel in the front month and ULSD and RBOB bouncing off recent lows.
In financial-related news, the Federal Reserve has decided to leave interest rates unchanged. This decision is somewhat surprising considering recent economic data of both the US and the world abroad. The strength of the dollar has an inverse relationship to crude prices, meaning a strengthening dollar could be expected to weaken the price of crude. It should also be noted that there are only two days remaining in the month. The leading indicator of commodity pricing will be the second month futures contract as buyers and sellers are looking to find balance for month end.