Energy markets capped several days of gains with a pause hat saw WTI and Brent end the day with minor losses but keeping WTI at $75.23 a barrel while Dated Brent crude ended the session at $84.80. Products saw little movement too as we predicted would be the case yesterday, as analysts and traders awaited a signal from the API on today’s EIA weekly inventory report.
According to the API, this morning’s numbers look like a 907 thousand barrel build in crude stockpiles while gas gasoline and diesel/distillates are thought to fall 1.7 and 1.2 million barrels, respectively. The Cushing, Oklahoma supply hub for WTI referenced oil is estimated to have seen inventories rise an impressive 2.02 million barrels.
Reports this morning appear to suggest that Russia and Saudi Arabia informed the U.S. that they would increase output in December to make up for the loss of production given American sanctions on Iranian oil exports. The move appears to confirm earlier reports that OPEC and Russia did indeed have spare capacity and that Presidential angst directed towards OPEC last month, would not fall on deaf ears. The timing of the sanctions on Iran coincides with a key mid-term U.S. election and with the news that Iranian exports of oil fell 1.7 million barrels in September, the pledge to backfill and replace the shortfall will have to be a substantial one. Otherwise, expect oil to gain noticeably over the next several weeks.
Turning to pump prices, weeks of escalating value in oil are beginning to make its mark on drivers. According to the GasBuddy Live Ticking Average, median gas prices now stand at $2.906 a gallon, up 2.8 cents compared to last week, up 8.1 cents in contrast to last month and 38.2 cents a gallon higher than on October 3, 2017. For its part, diesel continues to surge ahead, up 4.6 cents a gallon this past week alone to $3.234 or a full 50 cents a gallon above prices this same day last year.
With expectations of a bullish EIA Weekly Petroleum Status Report this morning, especially in light of what should be a substantial build in crude stockpiles given the large number of refineries lessening their demand as they undertake seasonal turnarounds, markets could resume their upward trek and build on the momentum of the past few weeks. Short of an unexpected build in supplies across the energy spectrum, look to oil making further gains, while refined products follow suit.