Oil prices are dipping lower for a 3rd straight session after the API surprised many by showing a build in US crude inventories last week. Refined products are following crude’s lead this morning as they await today’s DOE inventory report, and tomorrow’s announcements from OPEC and the EPA.
The API was said to show total US crude inventories increasing by 1.8 million barrels last week, while stocks at Cushing OK dropped by 3.2 million barrels due to the Keystone pipeline closure. Gasoline stocks were said to drop 1.5 million barrels while diesel inventories increased by 2.7 million. Prices reacted negatively to the report – both refined products were down more than 2 cents overnight – but have since wiped out those losses and appear to have moved back into “wait and see” mode ahead of the OPEC announcement tomorrow.
Doubts about OPEC’s ability to get another extension deal done outside of the cartel had been cited for some weakness in Brent this week, and may have been contributing to the selling we saw overnight. Those losses seem to have been erased this morning after the Russian energy minister said after meeting with the Saudis he thought an extension would get done. Expect plenty of these unofficial comments today as stakeholders crowd the sidelines of the OPEC meeting.
US Equity markets continued their record run Tuesday, encouraged by signs of progress towards tax reform in the Senate, and by testimony from the new FED appointee that could be deemed as friendly to the industry. While the correlation between equity and energy prices remains weak, there is historically low volatility in both markets suggesting a lack of fear among investors that’s helped the bull runs for both asset classes.