The oil market is relatively flat this morning and seems to be looking for direction after yesterday’s close that saw crude and diesel finish up $1.14 and $.0279, respectively, while RBOB was down $.0068. Most of the movement can be attributed to the DOE stats released yesterday morning and some of their discrepancies with the API figures released Tuesday night.
Of note today is the fact that crude is currently trading over $50 a barrel for the first time since June of this year. With the market projected to be oversupplied into 2017, Goldman Sachs’ Head of Commodities Research believes that U.S. crude will level off at $55 per barrel as some shale drillers get back online. Further supporting this view is the fundamental thought amongst analysts that with inventories near record levels, a sustained rally is unlikely even with an OPEC production cut on the horizon. “We see more downside than upside to oil prices from current levels. We remain skeptical that OPEC’s deal will set bounds to the existing supply glut. Middle Eastern exports are set to grow in the near term and the return of Nigeria and Libya are not-to underestimate bearish wildcard” said Zurich based analyst Norbert Ruecker.
Of more immediate news, Hurricane Matthew continues to churn, with current models showing it impacting the Southeast coastal states before veering east into the Atlantic. From there it is unknown what will occur. While hurricanes can bullishly influence prices through supply disruptions, the accompanying decrease in demand would lessen the overall potential impact. After the initial influence to the market, a few weeks of volatility in that area is likely until returning to normal. “Essentially, Matthew could add some volatility but the net will be just slightly bearish over the next couple of weeks as the ensuing demand falloff should be larger than the spike we are seeing ahead of the storm,” said one weather forecaster as reported by CNBC.