Yesterday, crude closed up $0.34/bbl to $44.21, RBOB closed down $0.0087/gal to $1.3618, and HO finished up $0.0091/gal to $1.4865. Currently, refined products are trading down $0.0350/gal with crude off over $1.00/bbl.
API data released last night showed a build in crude inventories of 6.3 million barrels, including a 2.5 million barrel build at Cushing, OK. Cushing is fast approaching “full” status which will be bearish for prices. There was a draw in gasoline of 3.2 million barrels, and a draw in distillates of 520,000 barrels. DOE statistics will be released Thursday due to the Veteran’s Day holiday today. If the DOE stats match the API data, the bearish market can be expected to continue. The product draws are not enough to offset the crude build.
A recent report from the IEA shows oil prices are set for a slow recovery. The IEA forecasts oil prices to rebalance at $80/bbl in 2020. The forecast for demand is that 900,000 bpd will be added in 2020.
U.S. imports of crude from Iraq will be extremely high in the month of November. Iraq is one of the least expensive places in the world to extract crude. With that being said, Iraq sells its crude at large discounts to global benchmarks. With crude being discounted, U.S. refiners are more likely to buy it. Currently, there are vessels carrying 19 million barrels from Iraq’s Basra Oil Terminal headed to terminals in the Gulf of Mexico and across the U.S.