Crude Builds...AGAIN...But Market Rallies

By: Angela Agostinone / October 29, 2015

Yesterday crude closed up $2.74/bbl to $45.94, RBOB closed up $0.0629/gal to $ 1.3501 and HO finished up $0.0595/gal to $ 1.4839.  The futures market is volatile this morning after yesterday’s rally, bouncing back and forth from negative to positive.

The rally began in the morning and continued after the EIA’s Weekly Petroleum Status Report was released yesterday at 10:30 AM. The EIA statistics show that U.S. crude inventories had a 3.4 million barrel build, however, there was a 785,000 barrel draw in Cushing, OK.  Both refined products had a draw; gasoline inventories down 1.2 million barrels, and distillates down 2.9 million barrels.  Refinery utilization was up 1.2% from last week to 87.6% of capacity; however PADD I was only up 0.3% while PADD II was up 6.1%. Despite the increase, PADD II is still just at 79.6% of capacity, reflecting heavy turnaround.

When there is a build in crude inventories, it usually results in weaker prices. So what caused the rally? First, although there was a build in crude inventories, there was a significant draw in inventories for Cushing; second, both gasoline and distillate inventories fell despite the refinery utilization increase, which shows healthy demand and exports.

Other news from yesterday is that the Federal Reserve kept interest rates unchanged following its two-day meeting in Washington. However, the Fed might raise rates in its last meeting of the year in December. If rates are increased, the U.S. dollar would strengthen resulting in weak energy prices. Since this has not yet happened, it was interpreted as bullish by the market yesterday.

The market also had some strength on news of Russian strikes in Syria and the PEMEX headline that Mexico will import 75,000 barrels per day (bpd) of U.S. crude.  This seems a bit misinterpreted, because if you read the whole story it’s actually a swap of heavy crude for light and the U.S. net effect is zero.

Categories: Daily Market Update

Angela Agostinone

Written by

Angela Agostinone

Angela manages daily price changes from suppliers to ensure Guttman Energy customers are getting the most current and competitive rack prices. She is also responsible for relaying supplier product allocations to Guttman Energy's sales and logistics team, as well as analyzing specific benchmarks such as OPIS, Platts, and Argus to ensure each customer is getting the greatest value from their contracted fuel purchases.

Guttman Energy Daily Market Update Disclaimer – The information contained in this market update is derived from sources believed to be reliable; however this update could include technical inaccuracies or typographical errors and Guttman Energy does not guarantee the accuracy, completeness or reliability of this update. FURTHERMORE, THIS UPDATE IS PROVIDED "AS IS," WHERE IS, WITH ALL FAULTS AND WITHOUT ANY WARRANTY OR CONDITION OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY. GUTTMAN ENERGY ALSO SPECIFICALLY DISCLAIMS ALL EXPRESS AND IMPLIED WARRANTIES. YOU USE THIS UPDATE AT YOUR SOLE RISK. This update and any view or comment expressed herein are provided for informational purposes only and should not be interpreted in any way as recommendation or inducement to buy or sell products, commodity futures or options contracts.


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