Yesterday, WTI crude closed up $2.04 to $46.80/bbl, HO closed up $0.0469 to $1.4632/gal, and RBOB finished up $0.0466 to $1.4301/gal. The rally yesterday was the biggest daily gain since April. The market was up for a number of reasons: a weaker U.S. dollar, continued controversy with the Niger Delta Avengers in Nigeria, an international court ruling against China’s claim of ownership of a large piece of the South China Sea, and OPEC’s bullish outlook on supply/demand. The court concluded that China interfered with the Philippines’ fishing territory; however, the South China Sea is a major oil shipping channel, as it is the most economical route between China, Japan, Europe, South Korea, and the Middle East. OPEC believes oil supply/demand can be rebalanced by the end of 2017; the forecast for output is 32.97 mbpd in 2017 and demand is estimated to be 33.93 mbpd.
The market is off this morning because of the bearish API statistics report released yesterday. The APIs showed crude inventories with a build of 2.2 million barrels, Cushing with a draw of 166,000 barrels, gasoline with a build of 1.5 million barrels and distillates with a build of 2.6 million barrels. Expectations were very different; Reuters forecast crude with a draw of 3 million barrels, gasoline with a draw of 432,000 barrels, and distillates with a build of only 256,000 barrels.
The DOE statistics released today have the market trading even lower. As of 11 a.m. ET, WTI is down $1.67/bbl, RBOB is down $0.0525/gal, and HO is down $0.0712/gal. The DOEs showed a 2.5 million barrel draw in crude inventories, and Cushing with a 232,000 barrel draw. The statistics for the refined products were very bearish; gasoline showed a 1.2 million barrel build and distillates showed a 4.1 million barrel build.