A bullish EIA weekly inventory report for gasoline and distillates yesterday allowed energy markets to post a solid rise in valuation as refined products gained over 5 cents a gallon while WTI rose 63 cents to $64.61 a barrel and Dated Brent picked up $1.12 to end the session at $71.73.
A surprising 7.7 million barrel draw in gasoline combined with a strong 9.8 million barrel a day gasoline use sent markets confidently higher and confirmed that despite a 7 million barrel increase in oil stocks, fully 5.4 million was attributable to the ongoing problem at the Houston Shipping Channel, weeks after the Deer Park fire incident that saw a widespread chemical release. The fall in gasoline stockpiles reflected the ongoing, greater than usual, number of planned and unplanned refinery production issues affecting most regions except the Northeast.
For drivers, the pain at the pumps continues to intensify with pump prices now at their highest levels since October 26 and likely to breach $3 a gallon well before the official start of the summer driving season, Memorial Day weekend. According to GasBuddy’s Live Ticking Average, pump prices are clocking in this morning at $2.795 a gallon which is up 5.8 cents from last week, 29.6 cents compared to last month and 11.5 cents above prices on this day last year. Transportation costs, in general, continue to accelerate to the upside given diesel, which now stands at an average of $3.049 a gallon is nevertheless 7.2 higher than on those heady days last year. Even with the gradual seasonal move away from heating oil, changes to the universal use of low sulfur diesel by all maritime vessels, effective January 1, 2020, diesel will continue to find unusual support in market prices throughout the spring and summer.
Markets this morning are in a less positive mood with another observation from the Paris based IEA (International Energy Agency) that tightening global oil supplies and their effect on causing petroleum prices to rise, could dampen overall demand for fuel. Traders are also likely to looking at some profit taking as crude is down half a dollar while gasoline, the darling of yesterday’s trade, is down over two and a half cents a gallon on the NYMEX, while diesel is off half a penny. As such expectations for an overall loss on the day for the energy markets, as a whole, should be expected, but only temporary with Friday likely to reverse course to the upside.