Market Report & Analysis for 12/12/17 Morning Edition
Morning Market Overview
As the trading week kicks off the market is trading just this side of positive with distillate prices showing the most gain. Oil prices declined across the board for the second weekly decline in a row as the buy the rumor/sell the fact unwinding of some of the speculative longs continued after the OPEC production cut accord extension was announced.
Although oil prices were lower on the week they did end the weekly trading session on a positive note after modest gains on Friday. The positives at the end of the week that helped push prices higher on Friday were a possible strike looming by the oil workers union in Nigeria along with rising tensions in the Middle East and data from China showing their imports of crude oil in November hit the second highest level on record.
In our view the market also received a boost as participants digested the latest weekly snapshot of oil inventories released by the EIA in the middle of last week. The initial reaction was biased to the bearish side on a larger than expected build in gasoline stocks.
However, total combined stocks of crude oil and refined products declined by 2.5 million barrels on the week and are now 110.3 million barrels below the peak hit in the middle of February. US inventories have been in a strong destocking pattern even with US crude oil production making new record highs for the year.
In the latest Baker Hughes report issued on Friday showed the number of rigs deployed to the oil sector increased by just 2 rigs on the week and for the seventh weekly gain out of the last fourteen weeks.