Today’s market started out with bearish movements this morning, with both diesel and gasoline down almost 4 cents as of 10:30am. As 11:30am passes by, diesel has jumped back to about even, with gas down about 1 cent respectively. Brent crude gained 53 cents from yesterday’s settle to $48.16/bbl while WTI was playing catch up following the long Labor Day weekend, falling $1.27/bbl to $44.78/bbl. Despite the afternoon rally, global oversupply of crude is still weighing heavily on the market.
Customs Data showed that China imported 13.4% less crude in August than it had in July, totaling 6.26 million bpd. Although they have imported less crude, China has been taking advantage of the drop in the market to fill its reserves. It is estimated that they have 109 million bbls, compared to 65 million bbls at the same time last year.
North Sea crude output is currently at new highs and Saudi Arabia has said production will be flat in Q4, which should continue to keep crude supplies plentiful. In addition, fall refinery maintenance in the U.S will keep crude demands lower. We have had further refinery issues over the weekend which likely caused the product bounces from the morning lows. These are short term and the trend remains bearish.