Yesterday, WTI crude closed down $0.59 to $44.65/bbl, RBOB closed down $0.0115 to $1.3757/gal, and HO finished up $0.0063 to $1.3841/gal. The futures market is trading down across the board as of 9 a.m. ET. The August WTI contract expires after today’s session, so most trading will be in September. The driving factors influencing the market are the API statistics that were released yesterday, the stronger U.S. dollar and the statement from Russian Energy Minister Alexander Novak that Russia does not plan to work with OPEC on production cuts. The API stats were as follows:
Crude inventories: -2.3 million barrels; Cushing: -84,000 barrels
Gasoline inventories: +804,000 barrels
Distillate inventories: -484,000 barrels
The DOE statistics basically mirrored the APIs last night. The DOE stats are as follows:
Crude inventories: -2.3 million barrels; Cushing: +189,000 barrels
Gasoline inventories: +911,000 barrels
Distillates Inventories: -214,000 barrels
While this week’s hot weather in the Northeast is fairly normal for this time of year, the gasoline build is unusual. With summer being the busy driving season, draws in inventories are expected. Currently, gas inventories are the lower RVP summer spec, so this could cause weakness in prices toward the end of summer in order to liquidate the lower RVP barrels to prepare for the transition to the winter spec. If refineries cut production of lower RVP gas because of the builds and summer demand picks back up, it could lead to tightness the last week or two of driving season.
The market reacted to the stats; as of 11:15 a.m. ET, WTI and HO are now trading up, +$0.14 and +$0.0142 respectively, while RBOB remains down $0.0107.