NYMEX futures are continuing to tumble this morning after the release of yesterday’s DOE reports. Crude drew 3.6 million bbls, more than double of what was expected. Crude prices have lingered in the high $40’s to mid $50’s per barrel and are projected to stay in the $40-65/bbl range for the next five years. Both gas and distillate products built, gas 3.4 million bbls and distillate 2.7 million bbls, respectively. This is likely due to reduction of demand and a drop in exports. RBOB contracts normally rally about 57% from the winter valleys to summer peaks. Presently RBOB has only jumped up about 40% from its lowest value in December at $1.2707/gal, 17% percent less than the norm.
U.S. shale output has been dramatically growing, as a partial response to the potential cuts that OPEC may continue to enforce though the second half of the year. If OPEC continues to cut production As of 11 a.m. ET the market is continuing its downward slide. Front month HO has dropped below the $1.50 mark, down $0.0421 to $1.4946/gal and front month RBOB is also down $0.0480 to $1.5423/gal. The futures market has been trending downward for three consecutive days.
