Yesterday, WTI crude closed down $1.74/bbl to $29.88, HO closed down $0.0256/gal to $1.0109, and RBOB finished down $0.0822/gal to $1.0008. Last night the API report was very bearish; it showed a build in crude of 3.8 million barrels, with a 140,000 barrel build in Cushing, OK. Distillates had a 400,000 barrel build, and gasoline had a very large build of 6.6 million barrels, which is no surprise due to the winter storm that kept drivers off the road. Considering all the reported inventory builds, the market could have been expected to be trading down Wednesday morning. However, WTI is currently back up over $30/bbl and HO is up about $0.04/bbl as of 9:45 AM ET. The unexpected higher prices this morning are a result of Russian Foreign Minister Sergei Lavrov’s announcement that Russia is open to meet with OPEC and non-OPEC countries. Another piece of news that could influence the market is that the Buckeye Pipeline stopped both distillate and gasoline deliveries to Queens and Brooklyn in New York City due to a sunken barge.
The DOE statistics showed a much larger build in crude than the API reported, with a 7.8 million barrel build, and 747,000 barrel build in Cushing. Gasoline had a 5.9 million barrel build and distillates actually had a 777,000 barrel draw. The large build in crude and gasoline inventories has not changed the market; WTI is up $2/bbl and RBOB is up about $.01/gal.
The dollar is off 1.6% today-this and technicals seem to be the most plausible explanation for the rally.