Crude prices jumped by $1.28 during yesterday’s market session, quickly regaining the $47 per barrel (/b) level. Today’s session opened with West Texas Intermediate (WTI) crude at $47.08/b. The gasoline-crude price differential began to narrow. Gasoline prices opened with futures contracts at $1.7744/gallon, dropping as September delivery contracts switched to October delivery.
The U.S. Department of Energy (DOE) authorized the release of 200,000 barrels of sweet crude plus 300,000 barrels of sour crude from the West Hackberry site, to be delivered by pipeline to the Phillips 66 Lake Charles, Louisiana, refinery. The refinery was not closed because of the storm, but its crude supplies have been disrupted. The DOE will authorize additional volumes as needed. The last time an SPR release was authorized was after Hurricane Isaac in 2012. SPR crude releases are treated as a loan to a company, which is expected to repay the loan when supplies normalize.
In December 2016, Congress ordered the scheduled sale of 25 million barrels of SPR crude in fiscal years 2017 through 2019. The levels in storage greatly exceed the volume required by U.S. participation in the International Energy Program. Planned sales through 2025 will total nearly 190 million barrels. President Trump in May declared that the SPR was no longer useful because of the global surplus, and he proposed selling half of the crude and all of the gasoline to raise money for other priorities. Others have likened the reserves to insurance against events like natural disasters, and are willing to pay for maintaining the reserves at a practical level.
Today’s Jobs Report has just been released by the Bureau of Labor Statistics (BLS). The results were less favorable than expected. The BLS reported that non-farm payroll employment rose by 156,000 in August, missing expectations of 180,000. The unemployment rate edged up to 4.4%, while economists had forecast that it would remain unchanged at 4.3%.
WTI crude opened at $47.08/b this session, a jump of $1.13 from yesterday’s opening. Currently this morning, WTI prices are $47.20/b, up by 12 cents since today’s opening. The daily price range has been $46.63/b – $47.24/b.
