Today we received neutral information out of the EIA oil inventory report which made the market sell off initially, but reverse at around noon EST to the prior rally. Crude is up $1 and products 3.5 cpg, at writing. Crude stocks drew 1.9mmbs, compared to the API expectation draw of 0.75mmbs. 3.3mmbs of the crude draw was in PADD 1 (East Coast) and 0.65mmbs in PADD 3 (Gulf Coast); the primary reason for this was the drop in imports last week. Gasoline stocks rose 2.0mmbs, in stark comparison to the 3.7mmbs draw expectation. Distillate stocks drew 1.9mmbs, compared to the 0.3mmbs draw. Refinery runs fell 1.9% and production decreased 15 kbpd.
The most notable figure is the gasoline build. This is bearish news for the refined product, especially due to the fact that we built supply despite getting over the Colonial Pipeline hangover late last week. Both PADD 1 and PADD 3 built their stocks, which should suppress finished gasoline prices heading into October. NYMEX WTI crude prices dipped into negative territory after the reporting, but are currently trading at $45.15.
Now that the inventory data is behind us, all eyes return to the result of the informal OPEC meeting in Algiers. Most expect no change to OPEC’s strategy, which may send crude prices lower to test $40 again. However, the group might put together the framework for its official meeting come November 30th, in its hopes to prop up prices in the interim to keep their balance sheets afloat.
We are already hearing collaborative rhetoric from Saudi Arabia and Iran – if they can keep that talk going a couple more months, it will prevent crude prices from dropping further.