Analysis by Dr. Nancy Yamaguchi

 

West Texas Intermediate (WTI) crude oil prices have eased from yesterday’s highs, which reached $46.92 per barrel (/b), but they have managed to maintain levels in the $46.25/b – $46.50/b price neighborhood this morning. The market is awaiting the release of official weekly supply data from the Energy Information Administration (EIA). Of key interest is the issue of oil demand and inventories. Industry estimates varied widely this week, but a major drawdown in product stockpiles is possible.

 

Yesterday, the American Petroleum Institute (API) data on oil inventories surprised industry analysts. An earlier survey of industry experts had predicted crude stock drawdown of 3.0 million barrels (MMbbls), offset by gasoline stock additions of 1.0 MMbbls and distillate stock additions of 1.5 MMbbls. This amounted to a small drawdown of 0.5 MMbbls in net terms. However, the API data reportedly showed a crude stock build of 1.63 MMbbls, which was more than countered by major drawdowns of gasoline stocks (5.45 MMbbls) and diesel stocks (2.89 MMbbls). In net terms, the API data show a significant inventory drawdown totaling 6.71 MMbbls.

 

The EIA data is viewed as more definitive, and it will shed light on the stock movements. First, was there a significant drawdown in product stocks? And second, was any drawdown caused by a bump-up in U.S. demand? This would support prices, which are flagging based on news of reduced compliance rates with the OPEC-non-OPEC production cuts, plus the prospect of reduced demand growth in China.

 

WTI opened at $46.25/b this session, up by 26 cents, or 0.57%, from yesterday’s opening price. Prices are up by 25 cents so far today, with WTI at $46.50/b at present.

 

Diesel opened at $1.5088/gallon this morning. This was an increase of 1.02 cents (0.68%) above yesterday’s opening price. Diesel prices are $1.5212/gallon currently, up by 1.24 cents from today’s opening price.

 

Gasoline opened at $1.5849/gallon today, an increase of 2.61 cents, or 1.67%, from yesterday’s opening. Gasoline prices are $1.5972/gallon currently, up by 1.23 cents from today’s opening.