The energy complex moved higher, buoyed by bullish momentum yesterday. This was due in part to a continuing Kuwaiti oil workers’ strike, which entered its third day, and drew market worry over a potential decrease in the nation’s oil production. However, any concerns for long term loss of production has been alleviated, as a Reuter’s report noted the strike had ended this morning.
Also pulling the market higher yesterday was the drop in the U.S. dollar, as it had its largest drop in several weeks. As a result of the bullish news, May WTI and RBOB lead the market higher. The front WTI traded in a $3 range throughout the day, before ultimately settling up $1.30 to $41.08, a full $1 above the psychological $40 level.
Some of this bullish news was tempered after the release of Tuesday afternoon’s American Petroleum Institute’s (API) weekly report. This showed crude oil stocks up 3.1 million barrels, which exceeds a Reuter’s industry poll by 700,000 barrels. Today’s EIA number will be an important metric to see how the market’s bullish momentum reacts.
A day after severe flooding in Houston, many market participants there returned to work yesterday. The Gulf Coast market was two different stories on Tuesday. Despite cycle 22 distillates scheduling yesterday, the market activity was limited and the ULSD ultimately moved up only marginally. The focus was on the gasoline side of the barrel.
A slew of refinery news had buyers aggressively bidding the market to find sellers. Early in the day, one of the larger Gulf coast refiners located in Deer Park, TX was rumored to have had issues with a gasoline making unit. This was followed throughout the day by two other similar reports on different refiners. It appears that the post maintenance window has brought seasonal issues. As a result, Gulf Coast RBOB and CBOB basis were up around 3 cents.