Latest Market Commentary

November 16, 2017

The DOE inventory report showed that crude oil stocks were up 1.854 million barrels. This was a much bigger difference than the expectations for draw of over 1 million barrels. The crude oil stocks at Cushing, Ok were down 1.504 million barrels which did draw the market attention but these stocks are still above the high of the ten year range.

Gasoline stocks were up 895,000 barrels and this was a bit better than the expectations for a million barrel decline.

Distillate stocks were down 798,000 barrels which was better than the expectations for a much bigger draw.

Overall I would have to call the report bearish and Crude was soft and RBOB was soft but ULSD manages and up day. 

US crude oil production was 9.645 million bpd up 25,000 bpd from the previous week. The 9.645 is new record high.

Refinery runs were up 1.4% to 91.0% of capacity. This was the first reading over 90% for refinery capacity since Hurricane Harvey, which was in late August.

Gasoline demand fell by 324,000 bpd down to a total of 9.172 million bpd. US gasoline demand is now up by 1.5% over the past four weeks versus last year but down by 1.03% based upon a cumulative daily average versus last year.

Distillate demand fell by 457,000 bpd down to a total of 4.029 million bpd. US distillate demand is now up by 0.8% over the past 4 weeks versus last year and up by 7.2% based upon a cumulative daily average versus last year.

Russia and Venezuela signed a debt restructuring deal on Wednesday which allows Venezuela to make minimal payments to Russia in the next six years to help it meet its obligations to other creditors.

A commodities strategist at Scotiabank said that oil is due to pullback towards $50 per barrel as the market transitions into the seasonally weaker demand period and amid increasing inventories. This market has taken a little step back but is still way over done and in need of a correction.

Propane inventories were down 2.520 million barrels a big number. Midwest stocks were down 1.138 million barrels and the Gulf stocks were down 1.813 million barrels. Total stocks of propane are now at 74.680 million barrels which is 26.147 million less than last year. Last year at this time inventories were 100 million barrels. This low total amount compared to last year with more US export capacity is a concern for the market. Some decent winter weather which should create decent demand could be a real challenge. The market continues to be up near two year highs just waiting and watching on what comes next.

Tim Danze, MFA Oil Company Hedging Manager