The market remained bearish this morning despite EIA data yesterday showing the first drop in U.S. crude oil inventories in five weeks and imports down by 1.1 million bpd as weather delays are impacting the offloading of tankers in the U.S. Gulf. A rally has since followed.
Yesterday, March WTI crude lost 49 cents to $27.45, HO finished exactly flat at $0.9749, and RBOB finished up $0.0436/gal to $0.9425. This morning, we’ve seen strong volatility with the market range bound between -$0.0200 and +$0.0300. HO is currently trading up about $0.0100 and RBOB is up about $0.0130/gal.
Diffs in the Chicago cash market rose 14 cts yesterday, causing outright gasoline prices to jump 18cts from Wednesday’s mean price. Several factors could drive support for higher gasoline prices in the near future. Refiners are unlikely to make a dent in the some 500 million bbls of crude oil stocks as Gasoline and distillate inventories rose by another 1.3 million bbs last week, providing less incentive for refiners to produce these products. Soon prices will also be reflecting the added expense of the more stringent lower-RVP specifications of gasoline during the transition to spring and summer grades of gasoline. Additionally, some refineries are also considering cutting production rates or moving up their refinery maintenance schedules with crack spreads from late 2015 to mid-late February at some of the lowest points in the year.
So far in 2016, 24 of the total 26 days of trading have shown oil prices to have moved by more than 5% intra-day, creating a very volatile market. A move this big was a rare occurrence prior to oil prices crashing last year, and notably there was not a single day with a trading range this wide in 2013. Yesterday, WTI light sweet crude oil futures traded 1.6 million contracts, a record trading volume on the Chicago Mercantile Exchange.
Source: Business Insider