Fuels Market Watch 24

FUEL MARKETS TODAY – Market Overview

Oil prices plunged along with the stock market rout over the past two days, but markets appear to be recouping some of the loss today. Crude forward prices slid below $71/b before recovering slightly this morning. Crude is now trading in the range of $71.00-$71.75/b. The gains of the past three weeks have largely vanished. WTI (West Texas Intermediate) crude prices in today’s trading session opened at $70.99/b, a major downward adjustment of $1.69 from yesterday’s opening price of $72.68/b. Diesel and gasoline futures prices also opened sharply down. Prices are stabilizing currently, but oil prices are headed for a week in the red, following a four-week climb.

The stock market opened with a rebound this morning, with the Dow Jones recovering by 383 points, a welcome relief after a two-day rout. Investors are trying to comfort themselves by viewing the plunge as a necessary downward correction. Markets indeed had grown ebullient, particularly given the challenges facing national and global economies. Indonesian President Joko Widodo found the international tensions analogous to the “Game of Thrones,” where the “Great Houses” fought amongst themselves, ignoring the coming of an “evil winter.” He concluded that “victory or defeat in wars always brings the same result—destruction.”

The Energy Information Administration (EIA) released official oil supply data yesterday. The EIA reported a crude stock build of 5.987 mmbbls, a gasoline stock build of 0.951mmbbls, and a diesel inventory drawdown of 2.666 mmbbls. The net buildup of oil in storage was 4.272 mmbbls. The American Petroleum Institute (API) earlier had presented a much more bearish picture, with a massive (9.75 million barrel) buildup of crude oil stocks.