Yesterday, WTI crude closed down $0.24 to $52.41/bbl, HO closed down $0.0110 to $1.6219/gal, and RBOB finished down $0.0086 to $1.7110/gal. The market is mixed this morning following the API statistics released last night; WTI and HO are trading slightly up and RBOB is trading down. The API statistics were a bit of a surprise by not matching expectations. The stats showed a smaller than expected draw in crude inventories of 840,000 barrels. Cushing, OK had a draw of 672,000 barrels. Distillates drew 1.8 million barrels, and gasoline built 1.4 million barrels. Gasoline was the biggest surprise because it was expected to draw 1.9 million barrels.
It seems the optimism in oil prices has run out of steam this week; both Monday and Tuesday the market has settled down. There are two major opposing pieces of news that are keeping the market relatively flat. The first is the bullish news around OPEC/non-OPEC extending the production cut deal another six months. OPEC Secretary General, Mohammed Barkindo stated the countries are committed to reducing production to bring inventories levels down to the five-year average. The OPEC meeting to discuss this further is over a month away, scheduled for May 25th in Vienna. The bearish news involves concerns around increasing U.S. shale production. The EIA’s Drilling Productivity Report predicts a 120,000 barrels per day increase in production from April to May. The rising U.S. production could influence what decision comes out of the OPEC meeting next month.
The DOE statistics released at 10:30 a.m. ET just about mirrored the API statistics. The DOEs show crude inventories had a 1.0 million barrel draw, some of that coming from Cushing’s draw of 778,000 barrels. Distillates drew 1.9 million barrels, and gasoline built 1.5 million barrels. Distillate demand is still very strong, up 12% vs history. As of 11:15 a.m. ET, WTI is off $0.15/bbl, HO is flat, and RBOB is off about $0.01/gal.