Yesterday, WTI closed up $0.79 to $48.19/bbl, RBOB closed up $0.0164 to $1.5545/gal, and HO finished up $0.0069 to $1.4662/gal. This strength yesterday was referred to as a “healthy correction” in the PVM report by Tamas Varga. However, the downtrend continues this morning after the bearish API statistics last night. The API statistics had a large draw on crude inventories of 4.6 million barrels. The stats on refined products were bearish; both built significantly more than expected. Gasoline had a build of 4.1 million barrels, and distillates 1.8 million barrels. This morning, HO has been off about $0.01/gal and RBOB off about $0.0250/gal.
Adding to the bearish market is that Shell lifted the force majeure on Nigeria’s Forcados crude oil shipments. This will add 250,000 barrels per day into the market. These gains will just be offsetting the cuts made by OPEC. There is also concern around the tension between Qatar and the other Arab nations because it could potentially weaken the OPEC production cut agreement. A continuing piece of bearish news is the increased U.S. production. The EIA released its forecast for 2018 U.S. production to be at 10 million barrels per day.
The DOE statistics were released at 10:30 a.m. ET and the market instantly reacted to the bearish numbers. The DOEs reported crude inventories had a build of 3.3 million barrels. This is a 7.9 million barrel difference from what the API reported. The refined products also showed large builds; gasoline built 3.3 million barrels, and distillates built 4.4 million barrels. As soon as the report was out the market dropped across the board; WTI is off over $2/bbl, HO is off about $.04/gal, and RBOB is down almost $.06/gal. Key support to keep an eye on is $1.4445 for HO, which already broke through, so the next support level is $1.4144. For RBOB, the first level of support at $1.5364 was hit this morning and the next level is $1.5196, which we are currently well below. Below is a chart for both HO and RBOB; you can see we are nearing the bottom again. Or are we?