Just when it looked like energy prices were ready to make another run higher, some bearish inventory figures knocked prices sharply overnight, leaving us in a technical no-man’s land waiting for the next big move.
After a strong settlement put crude and refined products on the cusp of breaking out from their bearish October trend channels, the API was said to show a 3.1 million barrel build in crude oil stocks, a 2 million build in distillates and a 1.5 million barrel draw in gasoline. The increase in crude and distillates, when many were expecting export-induced inventory declines, sent prices lower immediately yesterday afternoon and seems to be driving the early selling this morning. The DOE’s weekly status report will be out at 10am central today.
Refined products were pushed up more than 2 cents early in Wednesday’s session on news that Delta was shutting its Trainer PA refinery due to a fire. Those gains were given back later in the morning when subsequent reports suggested the fire was relatively minor and most units at the plant remained in operation. Cash prices in NY Harbor did end the day by adding nearly a penny to basis differentials suggesting there may be some short term gasoline supply tightness caused by this event.
The IEA was a bit less optimistic in its outlook for the global economy and oil prices in its monthly oil market report published this morning. The agency does make note of the progress towards rebalancing the supply & demand equation for petroleum globally in 2017, but cautions that “continued discipline” will be required from producers if they’re disappointment in 2018.