Oil Prices Take Breather after Wednesday’s Strong Rally Led by Gasoline

Oil prices are taking a breather today after Wednesday’s strong rally due in large part to the gasoline inventory draw and low production levels in Venezuela.

WTI is trading lower this morning by $0.53 to $64.08/barrel after Wednesday’s rally which have prices trading at new highs for 2019. Gasoline was the primary cause for yesterday’s rally as it surged by 7 cents per gallon to $2.0692 after the Department of Energy reported an inventory draw of 7.7 million barrels. There has been a litany of refinery issues this spring, particularly in California, where retail 87 octane gas prices have eclipsed $4.00/gallon in some markets. The Los Angeles CARBOB market has contracts trading $0.62 over the May futures market while New York Harbor trades about $0.06 under. May futures have risen over 18 cents since the beginning of April, so profit taking today does make sense. RBOB currently trades lower by $0.0320 to $2.0372/gallon.

Another reason for yesterday’s rally was OPEC’s monthly report that indicated Venezuela’s oil production was 960,000 barrels per day which the International Energy Agency (IEA) later lowered to 870,000 barrels per day. Using the IEA’s data, Venezuela’s production has dropped 270,000 barrels from February and production is lower year-on-year by 600,000 barrels per day. The drop in production has been caused by U.S. sanctions imposed because of the political in turmoil in Venezuela that still persists and has subsequently resulted in electricity outages.

We’re below technical resistance on WTI of $64.38 so we will look to where we settle the next few days to see if the 2019 rally continues or if today’s breather is a sign of what’s to come. May ULSD futures currently trade lower by $0.0098 to $2.0778/gallon.

Written by:

I enjoy helping our customers understand the commodity markets and pricing solutions we can offer to best fit their business. My supply and trading experience in gasoline and distillate products allow me to provide a comprehensive view of our industry to make our customers feel comfortable with their fuel-related decisions.

Guttman Energy Daily Market Update Disclaimer – The information contained in this market update is derived from sources believed to be reliable; however this update could include technical inaccuracies or typographical errors and Guttman Energy does not guarantee the accuracy, completeness or reliability of this update. FURTHERMORE, THIS UPDATE IS PROVIDED “AS IS,” WHERE IS, WITH ALL FAULTS AND WITHOUT ANY WARRANTY OR CONDITION OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY. GUTTMAN ENERGY ALSO SPECIFICALLY DISCLAIMS ALL EXPRESS AND IMPLIED WARRANTIES. YOU USE THIS UPDATE AT YOUR SOLE RISK. This update and any view or comment expressed herein are provided for informational purposes only and should not be interpreted in any way as recommendation or inducement to buy or sell products, commodity futures or options contracts.