Thursday July 6, 2017
A strongly bullish Department of Energy (DOE) inventory summary gave the oil complex another boost on Thursday, though the ultimate settlement prices were far off the day's earlier highs. The DOE report, the third consecutive bullish set of data, added to the recent fervor (interrupted only by Wednesday's noted sell-off) that has seen oil rise by over 10-percent and finished products post double digit increases. The market did finish on a weak note today, however, and prices have continued to move lower post-settle. Market speculation on that weakness is that some OPEC members are wavering on their production cuts (i.e. cheating), but it seems like buying power just ran out of steam late in the day.
The results of this week's DOE report were as follows:
- Crude Oil - draw of 6.3 MMbbls (versus expected draw of 2.3 MMbbls)
- Gasoline - draw of 3.7 MMbbls (versus expected draw of 1.1 MMbbls)
- Distillates - draw of 1.9 MMbbls (versus expected build of 0.2 MMbbls)
Refineries continue to operate at very healthy rates (94% of capacity, nationwide), more than churning through the record domestic oil production (almost 9.4 MMBPD). Gasoline and distillate demand were very strong, which the bulls hope augers a summer long string of stock draws. Interestingly, there were large product draws in PADD I (East Coast) for both gasoline and distillates.
Prices were up early in the day and certainly continued that in the immediate aftermath of the DOE data. August WTI traded as high as $46.50 (up $1.50) at one point, recouping almost all of yesterday's loss (RBOB was up four cents at the same time). The afternoon fade began just after noon, and was much more pronounced for WTI and Heating Oil. The big weekly demand figure seemed to have given RBOB the extra edge today, and it posted a healthy gain at the settle (up almost three cents), whereas WTI and HO were only fractionally higher.
Written & Published by: PAPCO Supply & Trading