Afternoon Market Overview

The API started the weekly inventory report cycle with a mixed inventory snapshot. Crude oil declined more than expected with gasoline and distillate fuel stocks building less than expected. The total combined inventories of crude oil and products were modestly lower on the week.

Overall the market added to its intraday RBOB and crude oil gains and held onto the gains in ULSD after the report was issued. The API reported US crude oil stocks decreased by 5.1 million barrels on the week. Cushing crude oil stocks decreased by 3.9 million barrels. They also reported a 0.6 million bbl build in distillate fuel inventories and a 1.8 million bbl build in gasoline stocks.

Total combined inventories of crude oil and refined products were modestly lower for the week and outside the range of market expectations. Canadian imports into the US for the week ending Jan 5 decreased by 147,000 bpd to 3.377mn bpd and are now 258,000 bpd below the previous all-time record- high reached early in 2017, per the U.S. Energy Information Agency.

We are maintaining our overall oil view and short-term bias at cautiously bullish with a bias to the upside. The current fundamentals may be starting to turn toward the bullish side as the rebalancing process of the global oil market is still underway.

Market uncertainty seems to remain elevated.