As we enter a, historically, lack luster 4th quarter in the energy sector, the recent meteorological events coupled with a potentially quicker than anticipated rebalancing of the global crude supply glut by OPEC, we can only digest today’s Department of Energy’s Weekly Petroleum Status Report and accept the fact that the current environment is certainly not the norm. Crude inventories fell by 6 million barrels, Gasoline stocks built by 1.6 million barrels, and Distillates drew by 2.6 million barrels. Based on that data you would think the next pieces of information I would provide in regard to the markets would be: “WTI up a certain percentage and RBOB down a certain percentage.” But to no avail, WTI for November delivery is down 1% at $49.94 and RBOB for November delivery is up 0.83% at $1.5785.
Even a continued increase in crude exports cannot keep WTI in the plus column today. U.S. exports have become more attractive to buyers because of the current discount to Brent at around $5 bbl. As OPEC and Non-OPEC countries gather in Moscow this week to further discuss how well the production cuts have gone, we in the states have our eyes on, yet again, another potential disruption to our ship channels, refineries, and crude oil platforms in the Gulf of Mexico. Tropical Depression Sixteen is currently on path to hit the states, potentially as a hurricane, as early as Sunday.
For now, we can only wait and see if the historic fundamentals finally get their turn behind the wheel or will the latest dynamic of continued tightness in our refined products continue its path redlining in sixth gear till the holiday season.