The monthly data deluge is hitting energy markets this week, with OPEC, EIA and IEA monthly reports all released within 24 hours of each other, along with the API and DOE weekly reports. Add an FOMC announcement later today and we’ve got a huge helping of alphabet soup to digest which seems to be creating some choppy action. Prices are sliding modestly in early trading, but are still holding above longer-term support levels.
The OPEC monthly report released Tuesday put some downward pressure on prices as global demand estimates were held steady, while supply estimates were revised higher. Total OPEC oil production increased during the month, with gains in Saudi Arabia and Iraq outpacing declines in Venezuela, Libya and Nigeria.
The EIA also released its monthly Short Term Energy Outlook Tuesday, predicting US Oil output to continue its rapid growth and average 11.8 million barrels/day in 2019 up from 10.8 million barrels/day currently. The DOE’s statistical arm also projected that retail gasoline prices will average $2.87/gallon this summer, compared to an average of $2.41 last year.
The IEA’s monthly report was released this morning and follows a similar pattern. The agency is holding demand estimates steady for 2018 & 2019 but increasing supply estimates as US & Canadian production continues to exceed expectations.
The API was said to show inventory builds north of 2 million barrels for both gasoline and diesel, while oil inventories increased by roughly 830,000 barrels. The DOE’s weekly report is due out at 9:30 central.
The FOMC announcement is due out at 1pm central, and according to the CME’s FedWatch tool, traders are pricing in a 96% probability of a 25 point increase in the FED’s target rate today. There is also roughly an 90% chance of a 3rd rate hike before the end of the year, and with so much certainty in today’s outcome, we may not get much of a reaction unless there’s a sign that those future plans may be changing.