Yesterday was a BIG down day. WTI crude closed down $1.75/bbl to $27.94, RBOB closed down $0.0572/gal to $0.8989, and HO finished down $0.0715/gal to $0.9749. As of 1:00 p.m. ET today, refined products are recovering a bit, but crude is down again slightly. The API data report last night showed a build in crude inventories of 2.4 million barrels, 700,000 barrels of which are in Cushing, OK. The report showed distillates built by 1.7 million barrels and gasoline by 3.1 million barrels.
The DOE statistics that were released at 10:30 a.m. today showed a draw in crude of 754,000 barrels; however Cushing still had a 523,000 barrel build. The DOEs showed a build in both distillates and gasoline by 1.3 million barrels. Since the release, HO prices have been fluctuating but RBOB remains strong at +0.05/gal.
Federal Reserve Chair Janet Yellen spoke today about the expected rate hikes. Yellen said the Fed will hold off on raising interest rates for now. With all the volatility in the market, they are not going to make the situation worse by raising rates. The major concerns are China’s economy and the significant decline in oil prices. On Yellen’s comments, the oil markets fell and the dollar rose. Yellen did mention that the U.S. labor market remains solid: the unemployment rate dropped to 4.9% in January due to the 150,000 jobs that were created.
With this news from the Fed, and the continuing talks about OPEC meetings to discuss production cuts, it will be interesting to see if we have found a floor.