Analysis by Dr. Nancy Yamaguchi


After falling for five trading sessions in a row, West Texas Intermediate (WTI) crude and diesel opened higher this morning. Crude prices appeared to have pulled out of their decline this morning. Gasoline prices continued to decline, however, in part because of a potentially hefty stock build. Last week, the Energy Information Administration (EIA) reported a gasoline stock drawdown of 2.9 million barrels (MMbbls), the largest drawdown in a four-week streak of inventory draws. This helped support gasoline prices, though they remained a relative bargain moving into the Memorial Day weekend. If the current week shows a major stock build, as predicted by the American Petroleum Institute (API), it may signal weak post-Memorial Day demand.


Oil inventory movements are expected to be mixed this week, with crude inventories shrinking and product inventories growing. The API reportedly noted a larger-than-expected draw on crude inventories of 4.6 MMbbls, well above the Schneider Electric industry survey expectation of a 3.0-MMbbl drawdown. However, the API reported large additions to gasoline and diesel inventories. The API noted a 4.1-MMbbl addition to gasoline inventories, versus an industry expectation of 0.5 MMbbls. The API data also showed a 1.8-MMbbl addition to diesel stockpiles, versus the industry expectation of 1.0 MMbbls. The API data lent support to crude prices, but weakened product prices. The official data from the EIA will be released later today.


Crude prices are also receiving support from continued tensions in the Middle East. Qatar remains isolated, though diplomatic missions are underway. Adding to regional tension, there were two attacks in Iran that reportedly targeted the Parliament and a shrine.


WTI crude prices are in the $47.75 – $48.00 per barrel (/b) range this morning. Prices strengthened for a time yesterday, peaking at a high of $48.40/b before gradually declining. WTI opened at $47.98/b today, an increase of 58 cents, or 1.22%, above yesterday’s opening price. Current prices are $47.87/b, a decrease of 30 cents below yesterday’s closing price.


Diesel opened at $1.4609/gallon this morning. This was a modest increase of 0.15 cents (0.1%) above yesterday’s opening price. Current prices are $1.4619/gallon, down by 0.43 cents from yesterday’s closing price.


Gasoline opened at $1.5288/gallon today, a decline of 1.02 cents, or 0.66%, from yesterday’s opening. Prices are $1.5337/gallon currently, a continued drop of 2.08 cents below yesterday’s close.