Last night the American Petroleum Institute released its weekly statistical inventory recap. The API reported a draw in domestic crude of 1.9 million bbls and builds of 1.3 million bbls for gasoline, 4.3 million bbl for distillates. Although noted as a precursor and less reliable source to the EIA Statistics released at 10:30 AM today, the API news has pushed the futures market down further this morning. Refined products have seen a price decrease of over a dime in the past week and without a change in market conditions it does not seem likely that the trend will shift directions.
ULSD prices have been pushed to multi-year lows due to oversupply in the marketplace. Production increases from OPEC, Iran’s export ability, and high domestic refinery utilization have all contributed. With refiners incentivized by higher margins in refined products it would seem that this bearish trend on products will continue in the short term. As the world’s largest importer of refined products, China’s recent economic troubles have also added to the global oversupply of ULSD.
*Chart Courtesy of Nasdaq
Technically, price levels are testing key supports but are also oversold, so the next move is a bit in question.