Inventory Impact

Oil markets finished lower yesterday as testimony from the new Chair of the Federal Reserve Jerome Powell pushed the U.S. dollar index higher in late day trading.  Coupled with new data from the International Energy Agency released yesterday regarding U.S. production, all three indices closed solidly in the red. WTI crude closed down $0.90/bbl to close at $63.01/bbl while RBOB and HO also closed lower by $0.0233/gal and $0.0229/gal finishing at $1.8034/gal and $1.9630/gal respectively.

As yesterday’s blog mentioned, the U.S. is moving towards becoming the world’s largest oil producer by 2020.  The numbers to consider in the IEA report was the daily production of 11 million barrels per day and the 7% increase from current statistics.  “The U.S. has stolen the show” said one analyst from the Economist Intelligence Unit.  “Climbing U.S. production continues to weigh on the market as traders fear that the OPEC output cuts will be nullified by the rising U.S. output,” said another investment analyst based in Australia.       

Late yesterday afternoon, the American Petroleum Institute released its weekly inventory numbers showing crude building by almost one million barrels with gas building by approximately two million barrels and distillates drawing 1.5 million barrels. 

Today, oil prices were struggling to stay higher after early morning news that China, India and Japan all reported a slowdown in monthly manufacturing and factory activity.  That struggle has given way to an even sharper sell off after the release of the weekly Energy Information Administration data.  With builds in crude and gas well over expectations, the market is currently down substantially, with both HO and RBOB down $0.0400/gal.                       

 

“Real-Time Price Transparency Across the Global Fuel Supply.” OPIS, www.opisnet.com/.

 

https://www.cnbc.com/2018/02/28/reuters-america-poll-oil-to-edge-higher-in-2018-as-opec-cuts-help-offset-u-s-supply-growth.html

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