Yesterday the market reacted to the terrorist attacks in Brussels with both refined products settling higher, RBOB closed up $0.0382/gal to $1.4971 and HO closed up $0.0147/gal to $1.2521. But, prices are lower this morning due to the API report which was released last night. It showed a build of 8.8 million barrels in crude inventories, however, crude inventories at Cushing had a draw of 1.4 million barrels. The report showed gasoline had a 4.3 million barrel draw, and distillates had a small draw of 400,000 barrels. The futures market is down across the board and is likely supported by the API’s larger than expected crude build.
President and CEO of Vitol, Ian Taylor stated, “We expect this coming year to be challenging for the oil sector.” Vitol is a global energy and commodities trading group. The decision at the April 17th production freeze meeting will be a key indicator of if this bearish statement will be true or not. Fundamentally, nothing has changed. There is an oversupply of oil and until that diminishes the year 2016 will certainly continue to be challenging.
China’s slowing economics has also had an impact on oil demand growth. However, India is a new rising source for oil demand. India’s GDP growth surpassed China’s for the first time last year. India’s oil consumption is estimated to increase by 250,000 bpd this year to 4.23 mbpd. The country is projected to overtake Japan as the second biggest oil consumer in Asia.
The DOE statistics released at 10:30 a.m. ET showed a 9.4 million barrel build in crude inventories, with a draw of 1.3 million barrels in Cushing, OK. The DOE’s showed that distillates had a small build of 917,000 barrels and gasoline had a drop in inventories of 4.6 million barrels. Since the release of the statistics the market has dropped even more; WTI is currently down 1.17/bbl, RBOB is down 0.0288/gal, and HO is down 0.0360/gal as of 11:15 a.m. ET.