Commodities Under Selling Pressure
February 26, 2021
I somehow got the wrong numbers on propane inventory yesterday so let me update to the correct numbers. Propane stock were down 5.158 million barrels putting total stocks at 43.491 million barrels. Last year at this time there were 68.132 million barrels a difference of 24.641 million barrels. Midwest stocks were down 1.976 million barrels putting total Midwest stocks at 9.759 million barrels compared to last year at this time when there were 13.266 million barrels a difference of 3.507 million barrels. Gulf Coast stocks were down 1.824 million barrels putting total stock there at 26.534 million barrels compare to last year at this time when there were 47.031 million barrels a difference of 20.497 million barrels.
A sell off in the bond market has made the US dollar trade higher and the higher dollar puts selling pressure on all commodities but especially crude oil prices. After the very impressive and relentless rally these energy markets have been on it is very easy for the higher dollar to cause some traders to take profits. Most analyst are of the opinion that any pullback is just a correction and the fundamentals still support the bulls longer term.
Some of those bullish fundamentals are reports like this one that said US crude oil inventories have fallen 40 million barrels over the last three weeks, with cold weather demand for heating fuels offsetting a rise in gasoline and crude stockpiles. Adding some selling pressure to crude on the other hand is the near term fact that US crude production appears to be coming back online faster than refineries can ramp back up which could cause increases in crude stockpiles.
Reports have also indicated the China’s petroleum storage reserve is nearly full and their imports will slow in the second quarter as many refineries go on turnarounds. This outlook for less demand is also helping the sell off this morning.
Fox News reported that the US military carried out an airstrike against an Iranian-backed militia stronghold in Syria Thursday. This was in retaliations for rocket attacks on US troop locations in Iraq.