Markets await Hurricane Zeta
October 28, 2020
Yesterday the API said crude oil stocks were up 4.577 million barrels, gasoline stocks were up 2.252 million barrels and distillates had a draw of 5.333 million barrels.
The DOE inventory report just released this morning had crude stocks were up 4.32 million barrels, gasoline stocks down 892,000 barrels and distillates down 4.491 million barrels.
I was out for two days and the news has not changed. Rising cases of coronavirus and more restrictions are a concern for demand, increases to the rig count, no stimulus, and more Libyan production. The market is again dealing with another Hurricane hitting the Gulf Coast, but energy prices were off in early trading this morning on the above concerns. The market will wait to see if the hurricane has any major impact before making a big reaction.
Propane inventories were up 66,000 barrels but still sit 3.574 million more than last year at this time. Midwest stocks were up 91,000 barrels and are 660,000 barrels behind last year. Gulf Coast stocks were down 109,000 barrels but at are still 1.971 million more than last year.
The current outlook is that OPEC+ will hold production levels when they meet on November 30 through December 1. This is a change from the original plan to increase production by 1.9 million bpd beginning in January. The fact that global inventories are still above the five year average and concerns that increased cases of COVID-19 will continue to weigh on demand impact their decisions.
The energy markets are testing the lower end of the ranges they have been stuck in for months and at this point those ranges have held up and kept these markets rangebound. Traders will be watching these lower levels to see if the market can finally break out of the range and test lower values.