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Mid-Morning Market Shift Saves an Early Morning Drop

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Daily Settlement Prices

Wednesday night into Thursday morning, markets were trending lower. Although the previous day's inventory report was bullish, selling occurred as market participants looked to take profits from the almost $6 increase in WTI since May 9th. Added to that was concern about the possibility of an interest rate hike occurring in June. This market sentiment was quickly seen in a rising dollar, which reached its highest level since March 29th. As a result of a stronger dollar, June WTI was down almost $1.50 and June RBOB was down more than 5 cents.
Markets began to shift around mid-morning, as the weaker price levels brought buyers back into the fold. The buying moved markets far off the lows of the day to finish closer to the prior day settle. While it is tough to attribute anything in particular to the intra-day rebound, markets are still focused on reduced production in both Canada and Nigeria (where a prominent oil terminal was closed due to violence), along with strong domestic demand for refined products.
The lone exception to the weaker market was the Natural Gas complex. The EIA weekly release showed a build of 73bcf, which was at the low end of expectations. However, despite the lower than expected build, inventories remain at elevated levels following the milder winter.
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