The market is being supported so far today by a weaker U.S. dollar and yesterday’s DOE report of a 6.2 million barrel draw on crude inventories. So why is the dollar weak this morning? Yesterday, Janet Yellen announced that the FED will not increase rates but she did mention a rate increase in the near future. As of 11:30 a.m. EST, HO is up $0.0250, gas is up $0.0050 and crude is up slightly over a dollar. In other news, Line 1 on the Colonial Pipeline resumed full operation last night, but shipments will be at a reduced rate, for precautionary reasons. This doesn’t mean that everything will be back to normal today or tomorrow in the Southeast. Colonial stated that it will take several days for everything to return to normal logistics. The leak on the main gasoline line of the Colonial pipeline was the largest leak in almost 20 years. Before restarting last night, it was shut down for more than 12 days. The gasoline outage led to a record drop in inventories in the East Coast and stockpiles in the Gulf reached record highs.
Moving on to news that may have put a stronghold on the rally yesterday, Russia is producing oil at its fastest pace since decades ago. Keep in mind that the OPEC meeting is on September 28th, and the broad topic of the meeting is the possibility of putting an agreement in place to bring crude prices back over $50 a barrel. A couple weeks ago Putin made a statement about his confidence in working together with the other producers. So why is Russia breaking records? “Russia keeps posting new record highs because neither Russia nor OPEC managed to agree upon freezing,” Alexander Kornilov, an oil analyst at Aton LLC, told Bloomberg. “Production is profitable.”
Everyone hold on to their hats for the meeting next week.