Fuels Market Watch 24

FUEL MARKETS TODAY – Market Overview

Crude oil prices have ebbed over the past 24 hours. WTI (West Texas Intermediate) crude prices in today’s trading session opened at $70.24/b, up by $0.35 from yesterday’s opening. Prices since have ebbed below the $70/b mark. Gasoline futures prices also opened with gains in today’s session, while diesel prices declined. Prices made a downward correction, and now are roughly stable in a new, lower range.

Yesterday’s oil price rally was kicked off by a report from the American Petroleum Institute (API) showing a huge drawdown of 8.636 million barrels of crude oil from inventories. The API also estimated a stock build of 2.122 million barrels and an even larger diesel inventory build of 5.82 million barrels. The net result was an inventory draw of 0.694 mmbbls.

The price rally was stifled when the Energy Information Administration (EIA) later released official statistics, showing a crude inventory draw of 5.296 mmbbls, a gasoline stock build pf 1.25 mmbbls, and a huge diesel stock build of 6.163 mmbbls. Although the inventory flow direction agreed with API, the EIA data showed a smaller crude draw, a smaller gasoline build, and a larger diesel build. In total, the official data amounted to 2.117 mmbbls of oil flowing into inventory, rather than the 0.694-mmbbl drawdown predicted by the API numbers.

Hurricane Florence has been downgraded to a Category 2 hurricane. However, the wind speed is not considered the chief hazard. Heavy rains and storm surge waters are forecast. The National Weather Service issued warnings of “catastrophic flash flooding.” The storm’s center is approaching North Carolina and South Carolina, and as it moves inland, it is forecast to affect other states including Georgia, Virginia, and Maryland. As many as three million homes and businesses may lose power. Such a massive storm causes peculiar patterns of energy use: a surge in pre-storm buying, then often a lull as activity halts.