Market Shrugs Off Epic Crude Draw

By: Pam Corn / September 9, 2016

Bullish DOE statistics moved the market sharply higher on Thursday, with WTI closing up $2.12 to $47.62, RBOB up $0.0701 to $1.4165 and heating oil up $0.0557 to $1.4822. The DOE stats showed a large draw of 14.5 million barrels, the biggest decline since 1999. Gasoline inventories were down 4.2 million barrels, while distillates increased by 3.4 million barrels.

Today, the market is painting a different picture, with the decline in crude inventories seen as an anomaly caused by Hermine’s temporary disruption in production and imports. As of 10:15 a.m. eastern time, WTI is off a dollar, RBOB is down $0.03 and heating oil is down $0.02. It’s worth noting that, despite the big draw on crude, inventories are at historically high levels for this time of year.

Other interesting developments:

  • The move toward a production freeze continues to build momentum. Today, the energy ministers from Saudi Arabia and Algeria are meeting in Paris with OPEC’s secretary general. Reuters reports that an OPEC source has confirmed the meeting is a push for a deal regarding output.
  • The case for an interest rate hike this year was bolstered today. Boston Federal Reserve Bank president Eric Rosengren indicated he supports gradual interest rate hikes in order to prevent certain areas of the economy, such as commercial real estate, from becoming “too ebullient.”
  • Apache Corporation announced this week its discovery of a massive natural gas and oil reserve in the Permian Basin of Texas. Apache estimates the oil field, known as Alpine High, contains over 3 billion barrels of crude. For perspective, this is just under the amount of crude produced annually in the U.S.


Categories: Daily Market Update

Written by

Pam Corn

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