After a DOE-inspired sell-off Wednesday, gasoline and diesel prices are following Brent crude higher this morning ahead of the OPEC announcement. Today is the last trading day for December RBOB and ULSD futures, so most of the action will be seen in the January contract.
The long-awaited OPEC meeting is underway in Vienna, with an announcement on output expected later this morning. The opening comments noted that the cartel is approaching the “half-way” point of rebalancing global oil supply & demand. There are plenty of rumors and guesses swirling that should keep prices active most of the day.
The EPA is scheduled to release next year’s renewable fuel obligation volumes later on today. RINs have been holding steady for the past week waiting to see if any changes from the levels proposed in July will be made, but already this morning there has been some buying that has pushed ethanol RINs up about 3 cents
Record setting production and export activity highlighted the details of the DOE weekly status report, while a decline in crude and increases in product inventories seemed to dominate the headlines.
Should refiners cheer that they were able to export 8.5 million barrels of gasoline in a week, or be depressed that US inventories still increased by 3.6 million barrels on the week because domestic demand estimates had one of the largest weekly declines in history? The sell-off we saw yesterday favors the second reaction, although a single week’s data point – particularly a government estimate of export or consumption – should not be taken as a definitive sign of a new trend.
US Crude oil production climbed for a 6th straight week, setting a new record for the “modern” era at 9.68 million barrels/day.
Diesel inventories seem to have made their seasonal turn in the past week and should begin building over the next month as harvest demand ends and the winter heating demand has not yet cranked up.