Latest Market Commentary

September 7, 2017

The inventory report issued by API has crude up 2.8 million barrels, gasoline down 2.5 million barrels and distillates down 603,000 barrels.

Crude stocks at Cushing, Okla. were up 297,000 barrels, while refinery runs are down by 2.1 million barrels.

Traders are waiting to see how today's Department of Energy report looks. The average estimates are calling for crude to be up 3.67 million barrels, gasoline to be down 5.97 million barrels and distillates to be down 2.99 million barrels. Propane is estimated to show a build of 2.3 million barrels.

The biggest news is Hurricane Irma which is the largest and most powerful storm every record in the Atlantic. Irma is a very powerful storm and it appears it will turn north and not get into the gulf and energy assets but as large of a storm that it is the impact is unknown at this time. The concern is that the storm might cause a large decline in demand and that could be bearish for crude. One again all of this is unknown as of now and the market other than RBOB has traded higher and then held in range. RBOB of course has been selling off since the run up into the end of the last month.

The Caribbean has over 100 million barrels for storage capacity which could be impacted. This is a big supply point for South America.

All eyes are on today's inventory report as the market gauges the impact of Harvey and what Irma may bring. There are also two other storms forming behind Irma that are concerns. We have not had a hurricane in the Gulf that has impacted energy assets for a while, and now we have had Harvey and and other threatening storms stacking up. That's not a great sign, but we'll have to wait and see how things play out.

Tim Danze, MFA Oil Company Hedging Manager