Fuels Market Watch 24

FUEL MARKETS TODAY – Market Overview

Crude oil prices eased overnight, but they are retaining some of yesterday’s gains. Prices slumped yesterday upon a major addition to U.S. oil inventories, but finally surged after an unusually prolonged time of thought about turmoil in Venezuela. WTI (West Texas Intermediate) crude forward prices opened at $53.17/b today, up by $0.72 (1.37%) from yesterday’s opening price of $52.45/b. Gasoline futures prices opened slightly higher today. Diesel futures prices were down by a fraction of a cent. Prices are volatile today, with mixed thoughts on Venezuela propping up oil prices, but market pessimism potentially rising.

The Energy Information Administration (EIA) yesterday released official statistics for the week ended January 18^th. The EIA reported a major addition of 7.97 million barrels (mmbbls) to crude inventories, plus 4.05 mmbbls added to gasoline inventories, and a modest drawdown of 0.617 mmbbls from diesel inventories. This totaled a major addition of 11.403 mmbbls to stockpiles. Earlier, the American Petroleum Institute (API) had reported an addition of 6.55 mmbbls to crude inventories, 3.64 mmbbls added to gasoline inventories, and 2.57 mmbbls added to diesel inventories. This totaled a major addition of 12.76 mmbbls to stockpiles.

Prices dropped on the inventory news. After a delayed reaction, prices rose in response to the turmoil in Venezuela. Venezuela’s crude production and exports have been shrinking for over a decade. Nonetheless, the EIA reports that the U.S. imported around 514,000 barrels per day of crude from Venezuela in 2018. Many U.S. Gulf Coast complex refineries rely on heavy crudes, and they are reportedly stocking up on Venezuelan heavies in case the Trump Administration moves forward with threats to impose sanctions on Venezuelan exports. This may not be a favored course of action, however, since the Trump administration has favored low oil prices for U.S. consumers.

Oil prices are likely to be volatile today. Upward price movements could come from news of U.S. actions against Venezuela, and/or positive news about the upcoming U.S.-China trade talks. Downward price movements could come from pessimism over the failed attempt to end the U.S. government shutdown. Approximately 800,000 federal workers will miss their second paycheck today. The Trump administration received another blow with the arrest of yet another Trump associate, Roger Stone, who charged with obstruction and lying to Congress.