Thursday February 16, 2017
Markets were relatively unchanged Wednesday as we continue to trade sideways. A result of upward pressure from OPEC cuts and fund lengths matching downward pressure over fears of domestic supply growth, front month WTI continues to trade in the very narrow $2 range ($52-$54). It has spent most of the last four trading sessions inside the one dollar range of $53-$54.
Yesterday's Department of Energy's report was mostly bearish (stats below) and for the most part highlighted numbers similar to Tuesday's API release. The DOE data also showed another size-able build in crude oil stocks. This week it was up 9.5 million bbls, mostly in PADD III (Gulf Coast) as refinery utilization retreated. Gasoline stocks built just under 3 million bbls, the majority of which was in PADD I (East Coast). The PADD I build continues the trend of gasoline stocks swelling along the East Coast.
Winter storms in the northeastern United States, likely affected distillate demand this past week, but conversely tough road conditions will likely hamper gasoline demand. Despite all the reported supply builds it was not enough to spur a market selloff, and we continued to hold the recent trading range.
The results of this week's DOE Report data are as follows:
• Crude Oil Inventories: +9.5 million bbls
• Gasoline Inventories: +2.8 million bbls
• Distillate Inventores: -700,000 bbls
Physical product in the Gulf Coast continues to be focused on the gasoline side of the barrel. The recent sell off has continued over the past several days as we get closer to the end of purely winter spec season. Although the region has faced its share of severe storms and dense fog recently, neither appear to be having much of an impact on supply. However, market participants will continue to focus on the region as we begin to transition out of winter gasoline as well as enter refinery maintenance season.
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