Trading is expected to be quite volatile today with two main drivers in the market: release of the 10:30 a.m. official DOE stats (pushed back a day this week due to Monday’s Memorial Day holiday), and the conclusion of today’s bi-annual OPEC meeting in Vienna with possible discussion of halts in production. Earlier, the market was trading down a cent on HO and RBOB, but as noon ET, both are up a bit over two cents, while crude is up slightly.
Yesterday, July WTI crude finished down only 10cts to $49.01/bbl. HO settled barely up, +$0.0018 from previous day settle to $1.4989, and RBOB finished up $0.0019 to $1.6153. API data last night showed an unexpected build of 2.4 million bbls, compared to an anticipated fall of 2.5 million bbls, with a 1.03 million bbl draw in Cushing. API estimates also showed a decline in gasoline inventories of 1.48 million bbls, and a draw in distillates of 1.15 million bbls.
Contradicting APIs, DOE statistics showed a draw of 1.4 million bbls on commercial crude inventories. Gasoline inventories drew by 1.5 million bbls, and distillate fuel inventories fell by 1.3 million bbls. Refineries operated at 89.8% of operable capacity last week.
The Vienna meeting is expected to reach no agreements on oil production. OPEC’s largest producer, Saudi Arabia, has been pushing for a collective production ceiling contingent on the cooperation of Iran. Iran rejected the idea of a group quota but is open to debate a national quota. OPEC had a production ceiling of 30 million bbls/day in December 2014, which Al-Falih, Saudi Arabia’s new oil minister, believed to be successful. “I believe that the strategy that OPEC adopted in 2014 has indeed succeeded. We see supply and demand converging,” he stated today. The ceiling would potentially prove OPEC’s significance in the oil market; however it is unlikely to materialize. Only one of 27 analysts surveyed by Bloomberg expect an output target from today’s meeting.
*Image Source: Bloomberg