Crude oil prices had their worst day since March of 2017, despite US oil inventories falling to their lowest levels since February 2015. While the 12.6 million barrel decline in crude oil inventories is the 2nd largest weekly drop on record, imports were down 11.3 million barrels on the week, which makes the decline look transitory, especially given the expectations that the Syncrude facility will begin coming back online in the next few weeks.
News that Libya would resume oil exports from 4 of its largest ports this week seemed to be the driver behind to the bearish sentiment, as it could mean around 800,000 barrels/day will hit the market in short order.
Soft demand in the US was also weighing on prices, as the EIA noted gasoline consumption was down 1.7% over the past 4 weeks, compared to the same period a year ago in its weekly highlights as retail prices averaged 56 cents/gallon more than they did this time last year. The timing was especially bad for this news, as it came the same week that gasoline production in the US reached a record high at 10.7 million barrels/day.
Crude oil production held steady at its record high of 10.9 million barrels/day for a 5th straight week, likely due to the Agency’s recent policy change of rounding the weekly estimates to the nearest 100,000 barrels/day.
Hurricane Chris is forecast to pass dangerously close to the Come-by-Chance refinery in Newfoundland, which is a frequent supplier of cargos to the NY Harbor, and coincidentally was in the news as a potential sale of the plant to Irving Oil was reported to have fallen through.
Somewhere in the shuffle of energy prices wiping out all of July’s gains, the EPA quietly trashed a plan to increase biofuel blending requirements for refiners. According to the EPA, an estimated 8 billion gallons of gas and 5.5 billion gallons of diesel produced by small refiners will be exempt from renewable standards in 2019. RIN prices dropped only 1.5 cents on the news while everyone else watched the NYMEX.
Notes & Charts from the Weekly Petroleum Status Report