The market has retreated back slightly this morning after EIA data showed an inventory draw for both gasoline and distillates, which resulted in gains in the market yesterday. For this time of year, gasoline is at its highest seasonal demand on record. HO is currently trading at a loss of $0.0300, while RBOB is range bound between -$0.0100 and +$0.0100. Yesterday, WTI crude closed up 0.88% to $32.15, HO finished up $0.0373/gal to $1.0594, and RBOB finished up $0.0441/gal to $1.0104. The Gulf Coast began trading vs the more expensive summer (low RVP) gas, contract or future which has caused significant jumps in the outright price in several markets.
Russia’s energy minister revealed that a meeting is planned for mid-March between OPEC and non-OPEC producers to formalize the recently agreed upon oil production freeze which will last for at least one year. Iraq’s oil minister stated that Iraq will only comply with production freezes if there is a “complete agreement” between all producers, which is unlikely as Iran is reported to boost output by 1MMbpd this year following their lifted sanctions. Saudi Arabia held a similar sentiment, refusing to cut production under the belief that other countries won’t join in, and the belief that high-cost producers should face the detriments of the current surplus. While it will not cut production, Saudi Arabia, along with four other OPEC members and Russia, have agreed to keep output steady at January levels.
In spite of OPEC production cuts appearing unlikely, the outlook is gloomy for the shale industry, as Whiting Petroleum Corp, one of America’s largest Bakken fracking companies, has decided to suspend all fracking indefinitely. It also reported plans to cut spending by 80 percent this year, the largest cutback to date by a major U.S. shale company.