Oil prices rallied yesterday across the board. WTI closed up $0.86/bbl to $44.24, RBOB closed up $0.0211/gal to $1.4598, and HO finished up $0.0335/gal to $1.4137. This rally was a result of a weaker U.S. dollar prompted by Fed Chair Janet Yellen’s discussion about the global economy yesterday, the expectations that weekly statistics would show declines in crude inventories for the eleventh week, and the cyber-attack on Russian oil producer Rosneft as well as the large shipping firm A.P. Moeller-Maersk.
However, the expectation of a decline in crude inventories was not met in the API inventory report last night. The API statistics showed a build in crude inventories of 851,000 barrels. Gasoline also had a surprise build of 1.4 million barrels, and distillates built 678,000 barrels. There was a note that the statistics could be distorted because of Tropical Storm Cindy in the Gulf Coast last week. After the release of these statistics last night, RBOB dropped $0.02/gal and HO was off $0.0150/gal.
The market was relatively flat this morning ahead of the DOE statistics out at 10:30 am E.T. After the release, the market rallied. The DOE report showed:
Crude inventories: +118,000 barrels
-Important to note, most of the draw was in PADD V because of downtime at Torrance Refinery.
Gasoline inventories: -894,000 barrels
Distillate inventories: -223,000 barrels
The DOEs were more bullish than the APIs, so the market is reacting with a rally but overall inventories are still at all-time highs. The question is: will this rally last, or could we test lows again?