Fuels Market Watch 24

FUEL MARKETS TODAY – Market Overview

Oil prices plunged along with the stock market yesterday, and prices continued to weaken overnight. Crude forward prices have sagged below $73 and are now trading in the range of $72.00-$72.50/b. It is possible that today will bring prices even below $72/b, reversing the gains of the past three weeks. WTI (West Texas Intermediate) crude prices in today’s trading session opened at $72.68/b, a major downward adjustment of $1.98 from yesterday’s opening price of $74.21/b. Diesel and gasoline futures prices also opened sharply down. Prices remain on a downward path this morning, though the rate of decline is leveling off.

Oil prices strengthened earlier in anticipation of Hurricane Michael, which hit the Florida Panhandle Wednesday afternoon as a Category 4 storm with sustained winds of 155 mph—reported as the third-most powerful hurricane to hit the continental U.S. The hurricane then moved into Georgia as a Category 3 hurricane, then was downgraded to a tropical storm en route to the still-recovering Carolinas.

Prices fell upon the release of information from the American Petroleum Institute (API,) showing a massive buildup of crude oil stocks. The API reported a 9.75-million-barrel (mmbbl) addition to crude oil inventories, a build of 3.4 mmbbls of gasoline, and a drawdown of 3.5 mmbbls of diesel. The Energy Information Administration (EIA) is scheduled to publish official oil supply data later today.

The oil complex dropped when the U.S. stock market plunged. The Dow Jones plummeted 831 points yesterday, with tech stocks falling sharply. It was the largest single-day drop since early February, and reportedly was the third-worst point decline. There are many possible reasons behind the selloff, which is rolling across the globe. There is an array of global economic issues, including the U.S-China trade war, Italy’s budget crisis, unresolved Brexit issues (though a deal may be possible as soon as next week,) and currency devaluation in emerging markets. In the U.S., the Fed has ended its era of accommodative policies and begun raising interest rates. President Donald Trump said that the Fed had “gone crazy.”