Oil Inventories and OPEC speculation will be the main focus to dictate future oil prices for the next month and a half, but other factors are greatly affecting the price right now: the dollar index and Chicago cash markets.
The dollar index has surged this month to a seven-month high, on increased speculation that the FED is ready to raise interest rates this quarter. A more expensive dollar makes U.S. dollar-denominated commodities, like crude oil, more expensive to buy, which decreases demand and thus the price of oil. This along with the 4.9MMb build in U.S. crude stockpiles yesterday have kept WTI prices close to the sticky level of $50/bbl.
As far as refined products are concerned, the Chicago refineries have completed turn-around season, which has dropped cash market prices significantly. Spot RBOB gasoline is trading at a 12-week low of $1.4068/gal as everything is now switched over to the winter-grade spec. This is a 7.5cpg discount to the Nov16 RBOB NYMEX settlement yesterday of $1.4818. Distillate prices have traded lower as well, with ULSD finished 3.5cpg lower yesterday to $1.5746/gal, despite the prompt month NYMEX ULSD contract settling up 1.28cpg to $1.5796/gal. The big driver is BP’s Whiting refinery resuming normal output again. Expect these refineries to ramp up run rates in the next few weeks, adding to the current glut of gasoline and distillate products in the market.