Energy markets moved slightly to the upside yesterday, shaking off early morning skepticism thanks in part to the EIA’s Weekly Petroleum Status Report which showed crude inventories had declined 2.7 million barrels the previous week, all the while, refined product stocks like gasoline surged 7.5 million barrels with diesel rising 3 million. The report was enough to allow WTI a slight 20 cent a barrel gain to $52.31 while Dated Brent managed a 68 cent improvement to $61.32. The big news in all the report was the 743,000 barrel inventory drop at the WTI oil hub in Cushing, Oklahoma. The draw there could be seen as a sign of robust refinery demand that has fewer buyers with suggestions of slackening fuel demand generally.
The morning trades point to a likely loss on the day, consistent with our suggestion here yesterday that two successive days of gains would follow with losses overall by day’s end. With WTI and Brent down by about half a dollar a barrel, traders are indicating some concern over the ambiguity of data on energy fundamentals. While OPEC, its aligned petroleum producing allies and even Canada have made good on their pledge to reduce output, more evidence will be required for markets to react decisively. A slowing Chinese economy, Brexit woes and a less than spectacular global economic outlook along with continued apprehension over a trade deal with the US and China, leaves room for the doubt and uncertainty conflicting market watchers.
For the time being, however, motorists continue to see lower and stable pump prices. According to GasBuddy’s Live Ticking Average, at $2.249 a gallon, the cost to fill up is a penny cheaper than last week, 12.8 cents below last month and a 30.1 cents a gallon discount compared to this day last year. As for diesel, which continues to hold a premium over gasoline on the markets since September 13, 2017, at $2.929 a gallon, the fuel that moves the world’s economy is now 38.2 cents below the 2018 high of $3.301 on October 13 and now 2.1 cents below its cost on January 17, 2017.
The trading day ahead isn’t likely to change direction as markets hold to their slight gains of the early week, weighing competing considerations that can be seen as both bearish and bullish. Like the early days of the new year, January isn’t a month for great rallies and often begins with losses, generally. The week is still set for a slight win despite today’s losses by the end of the trading session.