Yesterday, WTI crude closed down $0.86 to $50.93/bbl, HO closed down $0.0192 to $1.6379/gal, and RBOB finished down $0.0216 to $1.5359/gal. The market was correcting itself from last week after the reports that OPEC’s November production was at a record high. Last week the market rallied because of all the rhetoric around OPEC’s production cuts, but it now seems very unlikely that OPEC will follow through on those cuts. Another piece to rebalancing the market has to come from non-OPEC countries. There is a meeting in Vienna this Saturday to discuss if non-OPEC countries will agree to cut 600,000 barrels per day.
The market is down across the board today; as of 9:45 a.m. ET, crude is down $0.60/bbl, RBOB is down $0.0055/gal, and HO is down $0.0130/gal. The API statistics released last night were more bearish than bullish. The API stats showed a draw in crude inventories of 2.2 million barrels, however, Cushing had a build of 4 million barrels. Distillates had a 4 million barrel build, and gasoline had an 828,000 barrel build.
The DOE statistics released today were very similar to the APIs. The DOEs showed a draw in crude inventories of 2.4 million barrels, with a build in Cushing of 3.8 million barrels. Distillates had a 2.5 million barrel build, about 1.5 million barrels less than the API report. Gasoline had a 3.4 million barrel build, about 2.6 million more than the API report. Besides the total draw in crude inventories, with the majority coming from PADD III, the DOE report was bearish. Since the release, the market has remained down, with gasoline off even more now at $0.0185/gal due to the larger than expected build. WTI crude dipped below $50/bbl to $49.81.
This winter’s “first arctic blast” is to arrive at the end of this week. With lower temperatures finally arriving, the demand for heating oil should increase. It will be interesting to see if this cold front is enough to support HO prices with all the bearish overtone.