Traders Watch US-China Negotiations For Market Intel
October 10th, 2019
The inventory report for propane only showed an overall build of 132,000 barrels and the market was looking for a build of 750,000 barrels. Midwest stocks were up 11,000 barrels putting total stocks at 27.475 million barrels. This is 411,000 barrels less than last year at this time. The Gulf Coast stocks were up 996,000 barrels putting total stocks at 62.115 million barrels which is 21.860 million more than last year at this time. Stocks have been building in the gulf and it is likely that barrels from the Midwest have been getting shipped south to the Gulf all in an effort to prepare for more exports out of the gulf. Export are up roughly double of where they were last year at this time, but they have still not up to the expectations that many have been calling for, but continue growth is expected. Total stocks are at 100.773 million barrels.
The DOE inventory report said that crude stock were up 2.93 million barrels and the stocks of crude at Cushing, Ok were up 94,000 barrels. Total crude oil stocks are now at 425.569 million barrels, 15.618 more than last year at this time. Total stocks at Cushing, Ok are now at 41.677 million barrels which is 14.825 million more barrels than last year at this time. Gasoline stocks were down 1.21 million barrels putting total stocks at 228.763 million barrels which is 7.409 million barrels less than last year at this time. Distillate stocks were down 3.94 million barrels putting total stocks at 127.324 million barrels which is 6.141 million less than last year at this time.
Overall the inventory report was seen as bullish as the draw in products were bigger than expected and enough to offset the crude build. Gas stocks are lower than last year but still in the middle of the average range. Seasonally there should be some downside pressure on prices but if stocks continue to fall it will eventually tighten up supplies to a point where it will be supportive to prices, barring some global economic downturn. Distillate supplies are low and below the three-year average range and if stocks continued to decline it will appear that tighten up stocks and offer support longer term.
The potential offset to tightening supplies is sluggish growth from a weak economy. OPEC is saying that if the outlook for demand continues to decline, they will consider reducing production quotas.
Traders are tuned into the trade talks between China and the US going on today and tomorrow. Any headlines from these meeting could get a market reaction. Reports are already circulating that China will call it quits at the end of today and go home a day early putting some negative news already around the meetings. The tension between these two countries has been on the rise which is not creating a lot of optimism that a deal will get done.
Overall the energy markets are still mixed and stuck in a range.