Analysis by Dr. Nancy Yamaguchi


Oil prices opened above the $46 per barrel (/b) price level this session, and prices have strengthened further in today’s early morning trading. The week appears set to end in the black after last week’s downturn.


The U.S. Energy Information Administration’s (EIA’s) weekly supply data for the week ended July 7, 2017, noted the year’s largest drawdown of crude oil stocks, amounting to 7.564 million barrels (MMbbls) for the week. Gasoline stocks were drawn down by 1.647 MMbbls. Distillate stocks, in contrast, expanded by 3.131 MMbbls. Apparent weekly demand for diesel dropped sharply.


The EIA also reported an increase in U.S crude production of 59 thousand barrels per day (kbpd), which brought average crude output to 9,397 kbpd for the week. This was the highest production level since the end of July in 2015. This dampened prices, particularly when combined with news from OPEC. OPEC reported that its June 2017 crude production had expanded by 394 kbpd. Production rose notably in Libya, Nigeria, Iraq and Saudi Arabia. Libya and Nigeria are not included in the OPEC production cut agreement.


Federal Reserve Chair Janet Yellen concluded her semi-annual testimony to Congress. Regarding the goal of 2% inflation, Dr. Yellen stated that it was premature to conclude that current inflation trends were not on track to meet the target. The Fed intends to “remain on a gradual path of rate increases.” U.S. stocks rose—and treasuries fell—upon Dr. Yellen’s remarks. The Dow Jones Industrial Average opened with gains Monday through Thursday this week.


U.S. consumer price data has just been released, showing no change in the consumer price index. The forecast had called for an increase of 0.1%, following a 0.1% decline the previous month. Energy prices dropped significantly by 1.6% from the prior month.


West Texas Intermediate (WTI) crude prices strengthened yesterday, closing at $46.08/b. WTI opened unchanged at $46.08/b today, up by 64 cents from yesterday’s opening price. WTI futures prices are $46.44/b currently, up by 36 cents from today’s opening price.


Diesel opened at $1.494/gallon this morning. This was an increase of 2.1 cents (1.43%) above yesterday’s opening price. Diesel prices are $1.5068/gallon currently, up by 1.28 cents from today’s opening price.


Gasoline opened at $1.526/gallon today, up by 0.98 cents, or 0.65%, from yesterday’s opening. Gasoline prices are $1.5386/gallon currently, up by 1.26 cents from today’s opening.