Commodities markets took significant strides yesterday as WTI crude lead the way, posting a $1.27 a barrel gain on the day, easily overcoming the $70 resistance level landing at $71.12, its highest since July 11, while Dated Brent earned a smaller 37 cent uptick to arrive at $79.40 a barrel. Gasoline and diesel managed a near penny rise on a day that brought concerns over global supplies into sharper focus on the heels of a somewhat bullish EIA inventory report.
While yesterday’s weekly supply data by the EIA showed a less than expected 2.1 million barrel draw in oil stockpiles, including a 1.3 million barrel drop at the Cushing hub, it nevertheless represented the fifth week in a row of declines and confirmed for many that demand remains strong. Products provided an interesting outcome too with gasoline showing a 1.7 million barrel drop in supplies while diesel saw a smaller than expected build of only 800,000 barrels, considered light in the midst of harvest season and the onset of colder weather.
The reduction in U.S. inventories comes at a time when markets appear to be lessening the macroeconomic concerns of a growing U.S.-China trade war and unease over the news that Saudi Arabia appears unable or unwilling to make up for the impending loss of Iranian barrels once U.S. trade sanctions against Iran take full effect in just over six weeks.
Saudi Arabia’s stated comfort with $80 a barrel oil, Venezuelan output losses and continued unrest in Libya continue to support energy markets this morning although oil and refined products are pointing to the negative in early morning trades
For drivers, consistency appears to be the order of the day with pump prices continuing to hold at an average of just under $2.85 a gallon according to GasBuddy’s Live Ticking Average. At $2.85 a gallon, prices are comparable to last week but two cents above last month’s values and a full 25 cent a gallon higher than on this same day in 2017. On the other side of the pump island, diesel remains strong at just under $3.19 a gallon or 47 cents higher than last year with more indications of prices set to rise with the seasonal demand trend.
For the day ahead, look to energy markets ringing in a slight gain in values as fundamentals begin to be taken more seriously with an approaching tightness in global supplies throughout the balance of the month and into the next.