The furious fall rally in energy prices is taking a breather for a 2nd day with all contracts trading modestly lower this morning. Although it’s been more than a month since we’ve seen a 2-day sell-off, the moves have not yet threatened the bullish trend-line, so for now this appears to be some short term profit taking rather than a reversal of the trend. In order to break that trend, we need to see crude oil prices drop at least $2/barrel near term, and products drop by around 5-7 cents from where we stand today.
There did not appear to be any new developments in the Saudi drama Tuesday, which may be helping the market take a breath to reassess the situation. It may also be difficult to see a sustained sell-off without some sort of resolution to the recent tensions in the area.
OPEC published its annual World Oil Outlook report yesterday, a perennial favorite among Arkansas Razorback fans. While the cartel’s forecasts remain in line with previous reports, they did increase oil demand estimates for the next several years (which is certainly self-serving) but also increased their forecast for North American oil production (which is certainly not).
The API reported a 1.5 million barrel draw in US crude stocks, but another build at Cushing OK – the Nymex delivery hub – which likely won’t help the pattern of WTI prices softening vs other crude grades both domestically and abroad. Bloomberg had an interesting read on this topic yesterday. https://www.bloomberg.com/news/articles/2017-11-07/wti-crude-prices-aren-t-going-with-the-global-oil-flow
Refined product inventories were mixed with diesel declining about 3 million barrels while gasoline stocks were up roughly 500,000 barrels, both consistent with typical seasonal trends for this time of year. The DOE’s weekly status report will be out at 9:30 central.