Trade Issues Put Market Under Tension
June 24th, 2020
Crude oil and refined fuel product prices closed lower yesterday after hitting the highest point since March 6. Prices are under pressure this morning as trade tension put some uncertainty into the recovery of the global economy. Trade issues could derail the improvement of the U.S. and Chinese economies, which would hurt energy demand.
The market is in need of a correction. But the bears have not been able to get any momentum to the downside. Optimism continues to run high and traders are buying up the market.
The API inventory report called crude oil stocks up 1.7 million barrels and Cushing crude stock were down 325,000 barrels. Gasoline stocks were down 3.9 million barrels and distillate stocks were down 2.6 million barrels. The draw down could be an indication that demand is recovering, but traders will wait to see this morning’s data.
Reports have said the China’s oil demand has been strong as their imports of crude have been high. But those imports are now slowing down. They may have simply been filling their reserves while prices were cheap rather than buying due to strong economic recovery.
Average estimates for today’s DOE inventory report from Bloomberg are calling crude up 1.140 million barrels, gasoline down 1.759 million barrels and distillates down 211,000 barrels.
Average estimates for today’s propane inventory update are for stocks to build by 1.6 million barrels. The five year average estimate for this reporting week is a build of 2.316 million barrels.
Mexico experienced a strong earthquake and it has taken Mexico’s largest oil refinery offline.