Analysis by Dr. Nancy Yamaguchi
Oil prices reclaimed the territory above $45 per barrel (/b) yesterday, and they are currently in the $45.75/b – $46/b range. Prices began to strengthen after two key industry sources released projections of a crude inventory drawdown. Prices also received support from the release of the monthly Short-Term Energy Outlook (STEO) by the U.S. Energy Information Administration (EIA). The EIA made a 100-thousand-barrel-per-day (kbpd) downward revision in its forecast of year-2018 U.S. crude production, estimating that production will average 9.9 million barrels per day (MMbpd).
Yesterday morning, the DTN survey of market experts predicted a 2.2 MMbpd drawdown of crude inventories. However, the price impact was muted because the survey also predicted additions to gasoline inventories of 0.2 million barrels (MMbbls), plus a 0.7-MMbbl addition to distillate inventories.
This was followed by the release of the American Petroleum Institute (API) data, reportedly showing a major drawdown of 8.13 MMbbls of crude from stockpiles, plus a gasoline inventory drawdown of 0.801 MMbbls. The API data showed a larger-than-expected addition of 2.1 MMbls to distillate inventories. The EIA will release official supply and demand statistics later today.
Federal Reserve Chair Janet Yellen begins her semi-annual two-day testimony to Congress today. A key part of the testimony is expected to focus on why real wages have not risen in concert with the gains in job formation.
West Texas Intermediate (WTI) crude prices strengthened yesterday, regaining the $45/b mark by the end of trading. WTI opened at $45.75/b today, up solidly by $1.16 from yesterday’s opening price. WTI futures prices are $45.74/b currently, unchanged from today’s opening price.
Diesel opened at $1.4899/gallon this morning. This was an increase of 3.49 cents (2.4%) above yesterday’s opening price. Current prices are $1.4889/gallon, slightly down by 0.01 cents from today’s opening price.
Gasoline opened at $1.5294/gallon today, up by 2.54 cents, or 1.69%, from yesterday’s opening. Prices are $1.528/gallon currently, down by 0.014 cents from today’s opening price.