Yesterday, WTI crude closed down $0.84 to $52.17/bbl, HO closed down $0.0131 to $1.6221/gal, and RBOB finished down $0.0228 to $1.4875/gal. A lot of bearish news drove the market down. The first was the stronger U.S. dollar, the second was news that China’s demand in 2016 was the slowest it has been in three years, and lastly the bearish API statistics that were released last night. The API statistics showed a surprisingly large build in crude inventories of 14.2 million barrels, compared to the expected build of 2.5 million barrels. Gasoline and distillates also showed builds, 2.9 and 1.4 million barrels, respectively.
This morning the market has been relatively flat, bouncing between trading up and down fifty points. From the API statistic report last night, the market should have been off but it got some strength because of comments from OPEC. As soon as the bearish stats were reported, OPEC made a comment that it might extend output cuts into the second half of 2017, instead of the original plan of only six months. One of our traders notes that this has become a recurring theme: immediately following the release of bearish stats, OPEC issues comments related to production cuts.
Some bullish news came from the EIA’s latest Short Term Energy Outlook. It revised global oil demand for 2017 to be 1.7% higher and 1.5% higher for 2018.
The DOE statistics were released today at 10:30 a.m. ET and seem to have drove the market upward. The statistics showed a 13.8 million barrel build in crude inventories, with PADD III accounting for 10.9 million barrels of the total. Refined products were different from the APIs: gasoline showed an 869,000 barrel draw and distillates showed only a 29,000 barrel build. The biggest surprise was the gasoline statistics. As of 11:30 a.m. ET, HO is up about two cents, RBOB is up over four cents, and WTI is trading up thirty cents.