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Fuel markets appeared to have shrugged off what could have been a historic week, should an actual Coup attempt in Russia transpired. The current market mood appears to be focused more on actual supply and demand factors. Crude inventories showed a massive 9m barrel loss this week while finished gas and diesel were relatively flat. Gasoline futures soared yesterday taking ULSD along for the ride, although not as much.
After hitting yearly lows last week, Diesel pricing has risen over $.15 in the last week. As expected, bargain hunters typically buy in regardless of fundamentals. The increases have been muted somewhat as there is still that languishing fear that demand will fall off the proverbial shelf in the last two quarters. However, this weeks report showed that gasoline and diesel demand in the US remains somewhat strong, posting gains over last week and last year. While both products showed draws in inventories this week, and Crude showed a solid increase, that appears to more of a factor of less refinery production than anything else. Inventories for all appear stable with the exception of the SPR which is expected to begin repurchasing soon.
Typically Inventory levels and price direction have an inverse relationship. When Inventories rise, prices fall…. When Inventories fall, prices rise. As one said, “this ain’t no typical market”.
Oil markets moved higher this week primarily on the “surprise” production cut announced Sunday evening. Recall two weeks ago we cautioned “ All eyes will be on the FED and what they announce in the next meeting, more rate hikes or not? Also look to see if OPEC+ decides to cut production to bolster prices in the coming weeks.”
Futures markets appear to be content with being rangebound as the last month has seen us bounce back and forth by about $.25 in Diesel. The last four days has seen diesel futures fall almost $.15 in value.
Oil & Refined products all plunged today on a series of events. Both Brent & WTI were down over 3% this morning, and by 2pm refined products were down over 11 cents.
The last day of trading in 2014 saw Crude close out at $53.27/bbl, which was down 45% from the prior year. 2015 continued the trend with WTI dropping another 30% over the year - with December 31, 2015 settling out at $37.04.
This past week has been a wild one.
WTI dropped 2.8% today to close out at $44.43 a barrel, while Brent closed out down 2.5% . On the refined products side of the NYMEX, ULSD and Gas both took a pummeling as well, with both down over 4 on the day. To be exact, ULSD closed out down (-.0453) to 1.4772 and RBOB closed down (-.0471) to 1.3488.