Fuels Market Watch 24

FUEL MARKETS TODAY – Market Overview

Oil futures prices are falling this morning. Yesterday brought news of a much smaller-than-expected drawdown of U.S. oil inventories. WTI (West Texas Intermediate) crude forward prices opened at $51.20/b today, a drop of $0.75 (1.44%) from yesterday’s opening price of $51.95/b. Gasoline and diesel also opened with losses this morning. All are trending down.

Yesterday, oil prices rose upon the release of data from the American Petroleum Institute (API) showing a massive drawdown of crude oil inventories—10.18 million barrels (mmbbls.) The API also reported a drawdown of 2.484 mmbbls of gasoline and a buildup of 0.712 mmbbls of diesel, for a net draw of 11.962 mmbbls from inventories. This bullish picture later was contradicted by official statistics from the U.S. Energy Information Administration (EIA.) The EIA data showed a 1.208-mmbbl drawdown of crude oil, a 2.087-mmbbl build in gasoline inventories, and a 1.475-mmbbls drawdown of diesel inventories. The net drawdown was only 0.596 mmbbls. On the other hand, however, the crude stock drawdown was the second in a row, after ten straight weeks of inventory buildups that had added 56.35 million barrels to stockpiled crude.

The world’s political situation has grown even more unnerving. The OECD countries usually are regarded as politically stable. But the leaders of three major OECD countries are embattled. First is U.S. President Donald Trump, who may have committed impeachable offenses and may have committed a felony by ordering others to break the law. The second is U.K. Prime Minister Theresa May, who just survived a no-confidence vote and is bringing her Brexit deal proposal back to the European Union, where few people believe that progress can be made. The third is France’s President Emmanuel Macron, who now must face a no-confidence vote of his own following weeks of civil unrest. If President Macron changes his economic policies to defuse the Yellow Vest protest, France’s budget deficit could balloon.