The bears were on the loose yesterday due to the API report showing builds of 8.8 million barrels in crude inventories, which apparently outweighed the draw in gasoline of 4.3 million barrels, a small draw in diesel of 400,000 barrels, and the DOE statistics showing Cushing, OK drawing 1.3 million barrels. Where does the market go from here? Today, as of 1:00 p.m. EST, diesel is even, gas is up .0138, and crude reached a low of 38.33 earlier this morning (most likely from the bearish API report yesterday). Are we going to get back to a level similar to February? Since there are differing opinions across the board from major news services and powerful people from top producing countries, the pot continues to be stirred and it is keeping consumers on the edge of their seats.
Speaking of top producing countries, Russia’s Economic Minister reminded everyone that oil prices will linger around $40/bbl for the rest of 2016 whilethe country’s deputy Energy Minister revealed that its crude exports to Europe will reach a 30-month high in April. So why is Russia going from one extreme to the other? It plans to sign a global agreement next month to freeze production in order to help lift the price of crude, yet says it will export more oil to Europe in April than it has in any month since 2013. With the increase in exports, wouldn’t freezing production negatively affect Russia? The increase in Russian exports is mainly because of planned maintenance at refineries that reduced their capacity to process crude. It also reflects Russia's economic slump, which has reduced domestic demand for refined products. Russia can raise exports while keeping production flat simply by exporting some of the oil it would have refined.. Russia’s energy minister claims the freeze covers production, not exports. Clearly, the output freeze that will be discussed next month is rife with holes that producers such as Russia appear all too willing to exploit.