Yesterday, the market ended much stronger than Friday and Monday. WTI crude closed up $0.19/bbl to $35.89, RBOB finished up $0.0008/gal to $1.3778, and HO closed down $0.0143/gal to $1.0746. After the market closed it continued to strengthen after Kuwait’s OPEC official, Nawal al-Fezaia, announced there are positive indications that major producers will agree to freeze output despite Iran’s refusal. Also, strength was supported by the API statistic report last night when it reported a surprise draw in crude. The APIs showed a 4.3 million barrel draw in crude inventories, however, Cushing had a 600,000 barrel build in crude inventories. Distillates had a 2.7 million barrel build, and gasoline had a small draw of 116,000 barrels.
The DOE statistics just released this morning have the market trading even higher. As of 11:30 a.m. ET, HO is up over five cents, RBOB is up a penny a half, and WTI is up right under two dollars. The DOEs showed an even larger draw than the API report with a 4.9 million barrel draw in crude inventories, but Cushing still had a build of 357,000 barrels. The expectation was a 3.2 million barrel build. The report for refined products was a bit bearish, showing a build in distillates of 1.8 million barrels, and a build in gasoline of 1.4 million barrels. For distillates, even though there was a 1.8 million barrel build, PADD 1 had a large draw of 3 million barrels. Also noteworthy were the runs being high for this time of year, probably due to high margins on gasoline coupled with strong demand.
To determine if this gain is more than just a reaction to the recent down trend, the key resistance levels to watch for are: RBOB-1.3904, HO-1.0895 then 1.1143, and WTI-37.45. Technically, if the market closes over these levels, it would be expected to see further strength.