Yesterday morning, the market rallied in response to the Colonial Pipeline explosion Monday afternoon. RBOB futures were trading up over twenty cents per gallons at one point, and HO futures were up over seven cents per gallon. Eventually, the steam ran out when it was announced that the distillate line, Line 2, was already restarted and that the gasoline line, Line 1, should be back up and running this weekend. The restart of these lines happened much quicker than anticipated and quickly weakened the rally early yesterday afternoon. WTI crude finished down $0.19/bbl to $46.67, HO finished up only $0.0130/gal to $1.5169, and RBOB closed up $0.0646/gal to $1.4841.
The market was off this morning due to the bearish API report last night. The API statistics reported a 9.3 million barrel build in crude inventories compared to an expected build of 1.5 million barrels. Both refined products drew; distillates by 3.1 million barrels, and gasoline by 3.6 million barrels.
The DOE statistics out this morning were even more bearish than APIs. The DOEs reported a build in crude inventories of 14.4 million barrels, with the majority (8.1 million barrels) of the increase coming in PADD III. Distillates and gasoline both still had a draw, -1.8 million barrels and -2.2 million barrels, respectively. Since the release of the statistics, the market has come off even more. As of 11 a.m. ET, HO is off about six cents, RBOB is off four and a half cents, and WTI crude is down over a dollar.
In addition to the bearish news, uncertainty surrounds the OPEC meeting later this month. As of right now it is not looking likely that there will be a product cut/freeze, as countries are increasing production ahead of the meeting. Russia’s production last month was at a high of 11.2 million barrels per day.