Fuels Market Watch 24

FUEL MARKETS TODAY – Market Overview

Crude oil prices strengthened briefly yesterday before sinking again. WTI (West Texas Intermediate) crude prices in today’s trading session opened at $61.64, a small drop of $0.10 from yesterday’s opening price of $61.74/b. This was the eighth day in a row that crude prices have fallen. Gasoline futures prices opened lower in today’s trading session, while diesel futures prices rebounded. Prices for all appear to be trending down this morning.

The Energy Information Administration (EIA) released official statistics on U.S. supply and demand yesterday. U.S. crude production jumped by 300 thousand barrels per day (kbpd) during the week ended November 2nd. Although the weekly production data are preliminary, the data show that U.S. output has risen by approximately 2 million barrels per day this year. Continued growth is expected in U.S. production. The EIA noted that crude production had risen more quickly than anticipated, reaching a new monthly record of 11.3 mmbpd in August 2018. The EIA estimates that October production rose to 11.4 mmbpd, compared with its earlier forecast of 11.0 mmbpd. For 2018 on average, the EIA forecasts U.S. crude production at 10.9 mmbpd. The EIA forecasts that this will grow to 12.1 mmbpd in 2019.

The EIA also reported that U.S. crude oil inventories rose by 5.783 million barrels (mmbbls) during the week ended November 2nd. Gasoline inventories rose by 1.852 mmbbls, while diesel inventories were drawn down by 3.465 mmbbls. The net effect was 4.17 mmbbls of oil added to stockpiles. The inventory news tended to weaken crude and gasoline futures prices, while strengthening diesel futures prices. Earlier, the American Petroleum Institute (API) had reported a stock buildup of 7.8 mmbbls of crude, and drawdowns of 1.2 mmbbls of gasoline plus 3.6 mmbbls of diesel. The net effect was a 3-mmbbl addition to inventories. The official data was more bearish than the API numbers had suggested.