Daily Settlement Prices
Markets were somewhat tepid yesterday as participants digested a slew of new data. This new information pointed in different directions and saw price movement take a pause in its recent upward momentum.
On the bullish side, early Wednesday morning China released economic data showing commercial improvement. This release was highlighted by an increase in China’s export for the month of March. The reported rate of growth was the largest for a month in over a year. This is a positive sign for the economic outlook of one of the largest petroleum consumers in the world.
On the bearish side, the U.S. dollar broke out of its recent downtrend and moved higher. Wednesday was the highest level the dollar reached since April 6th and helped drive commodity prices lower.
The big data release on Wednesday was the Department of Energy’s weekly report. This too was a mixed bag. The outright crude oil inventory build of 6.6 million barrels far exceeded expectations and was slightly above Tuesday’s API numbers, which showed a build of 6.2 million barrels.
Cushing, OK saw a 1.7 million draw, while PADD III (Gulf Coast Region) saw a sizable 6.9 million barrel build for the week, which Year on Year, is an 11% increase. However, despite the surplus in crude oil inventories overall, gasoline was almost the opposite case. Overall, we saw a 4.2 million barrel draw, with inventories in every PADD lower and gasoline production increasing slightly. It is not possible to tell from the numbers whether this demand is due to suppliers aggressively moving product to prepare tanks for lower RVP product, or true demand, but the answer is probably somewhere in the middle.
The result of all this mixed data? April WTI traded between $41.26 and $42.42 before ultimately settling down just 41 cents. Products were in the same boat, trading in a narrow range on the day, before ultimately settling down a marginal amount.
Gulf Coast trading will be a key point today, as it is the last day to schedule product into the Colonial Pipeline for both gas and distillate. While not always the case, last minute scrambling to buy or sell product often leads to volatile swings during the day.
Refinery Production Highlights:
- Following a week of refinery issues from flaring to unit shut downs, net inputs of crude oil were down as expected.
- Distillate fuel output from the refineries appears to be leveling off. This is normal for this time of year.
- Production of gasoline was up slightly, but is largely continuing the flat trend which has characterized the past month or two.
- Stocks of crude oil in Cushing, OK drew nearly 1.8 million barrels on the back of the Keystone pipeline (a main supply line) shutdown that took place all of last week.
- Crude oil in the Gulf Coast built essentially seven million barrels last week, spurred by both imports finally getting through and less demand from the lame refineries.
- Inventories of distillate fuels were in all intents and purposes flat despite a surprise build of three million in the Southeast.
- Diesel imports were up slightly week-on-week, but are weak in comparison to past years. This would indicate the Southeast build was likely comprised of a correction from prior weeks or barge movements from the PADD III into Florida or a combination of both.
- Gasoline stocks drew more than twice as much as the API estimated, keeping with the seasonal drawdown theme and the abnormally high reported demand.
- Total gasoline stocks for the U.S. peaked this year and last in the same week, albeit this year’s level is 15.6 million barrels above last year’s. In the nine weeks since that peak this year, we’ve seen a total draw of 18.9 million barrels compared to 15.3 million barrels from last year.
Published by PAPCO, Inc. (PAPCO)
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