Yesterday, crude closed down $0.14/bbl to $37.51, HO closed down $0.0204/gal to $1.2592, and RBOB finished down $0.0058/gal to $1.2036. Despite WTI crude closing at $37.51, during Tuesday’s session it dropped below $37/bbl for the first time in six years. The low prices are a result of the global oversupply and OPEC’s decision to not cut production for 2016. A small additional factor in the bearish market conditions is the El Nino weather pattern. The unusually warm November and December has caused drastically lower demand for heating oil and natural gas. The forecast for the rest of December continues to show warm temperatures. Hopefully, La Nina follows the El Nino, making January and February extremely cold to make up for the lost demand for this year’s winter heating season.
Crude is currently trading up this morning, in response to the API data released last night. The API showed a draw of 1.9 million barrels of crude inventories. There was a build in gasoline of 2.7 million barrels, and a build in distillates of 5.6 million barrels. The draw in crude was confirmed in the DOE stats released today at 10:30 AM, making this the first decline in eleven weeks. The DOE report showed a draw in crude of 3.6 million barrels, but a slight build of 423,000 barrels in Cushing.