Market Report & Analysis for 9/28/2018 Morning Edition
Morning Market Overview
New York Mercantile Exchange oil futures and Intercontinental Exchange Brent futures contracts nearest to delivery settled down Wednesday following federal data showing U.S. commercial crude stocks increased for the first time in six weeks while domestic crude production ramped up to a fresh record high, and following comments from U.S. President Donald Trump on Tuesday that the United States would ensure an adequate supply of crude later this year when sanctions take effect against Iran.
West Texas Intermediate futures hit an intraday low of $71.47 bbl as the Federal Reserve completed their two-day monetary policy meeting this afternoon and Fed Chair Jerome Powell spoke with reporters. The U.S. dollar also eased to an intraday low immediately following the release of the Fed statement, with central bank officials lifting the federal funds rate for the third time this year, up 25 basis points to a 2.0% to 2.25% range as widely anticipated. Another rate hike is expected before year end. “Information received since the Federal Open Market Committee met in August indicates that the labor market has continued to strengthen and that economic activity has been rising at a strong rate,” read the FOMC statement. “Household spending and business fixed investment have grown strongly.”
Midmorning, the Energy Information Administration reported a 1.9 million bbl build in commercial crude inventory to 396.0 million bbl during the third week of September, moving off a 43-month low, while down 75.0 million bbl or 15.9% against the same week in 2017. The supply increase comes as refiners began seasonal maintenance programs, with U.S. crude inputs down a steep 900,000 bpd to a 16.514 million bpd 4-1/2 month low and the refinery run rate slid 5.0% to 90.5% of capacity during the week profiled. NYMEX November WTI futures settled down $0.71 at $71.57 bbl, and ICE November Brent futures ended with a $0.53 decline at $81.34 bbl. Brent’s premium to WTI widened to $9.77 bbl, just shy of last week’s three-month high. December Brent settled at a $0.55 discount to November delivery, which expires Friday afternoon. NYMEX October ULSD futures settled down 0.55cts at $2.2998 gallon after consolidating within Tuesday’s trade range, with EIA data bullish for the diesel contract.
EIA reported a more-than-expected 2.2 million bbl draw from distillate stocks for the third week of September to 137.9 million bbl, while implied demand increased 139,000 bpd to a 4.291 million bpd four-week high. NYMEX October RBOB futures settled down 0.92cts at $2.0585 gallon, ending at a 1.23cts premium to November delivery ahead of its expiration Friday.
EIA reported gasoline stocks increased a more-than-expected 1.5 million bbl to 235.7 million bbl during the week profiled, with supply at a record high for this time of year.
