Reverse, Reverse

The bulls and bears have been battling it out with some violent intra-day price reversals as of late and today is no exception. 

Yesterday was the DOE stats day which was where we saw the first reversal. Inventory data stated that U.S. crude oil inventories built 5.8mmb, gasoline drew 3.2mmb, distillate drew 0.4mmb, Cushing, OK crude oil drew 0.8mmb, refinery runs declined 2.4% to 94.3% utilization, and production increased 0.1mmbpd to a record 11 million barrels per day. Initially, the market sold off on the news, focusing on the large build in crude oil stocks. However, it later rallied as it appeared traders focused on the gasoline draw, decrease in refinery runs, and increased demand figures. Gasoline demand increased 0.433mmbpd and distillate demand increased 0.336mmbpd.

Overnight, WTI crude was down almost $1/barrel as there was a broad commodity sell off linked to continued trade war rhetoric between the U.S. and China. However, around mid-morning today, the Saudi OPEC governor added some bullish comments which helped us reverse course to WTI currently trading up $0.89/barrel to $69.65. The governor said Saudi Arabia’s July exports will be roughly equal to June’s level, August exports are expected to drop 100,000 barrels per day, and that concerns of Saudi Arabia and its partners moving to oversupply the market are “without basis.” Basically, the Saudi’s will be decreasing production next month and that is causing buyers to feel comfortable, reversing the market higher for the second straight day.

August WTI expires tomorrow which may continue the volatility, especially as traders position themselves for the weekend.

August RBOB currently trades unchanged at $2.0444/gallon and ULSD is higher by $0.0021 to $2.0924/gallon.

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