Oil expects bearish inventories as OPEC sees little growth in 2013

Global equity markets are back on the defensive giving back most of this week's gains over the last 24 hours as shown in the EMI Global Equity Index table below. The EMI Index is now only 0.1% higher for the week with the year to date return narrowing to 1.9%. Seven of the ten bourses in the Index lost ground overnight but all remain in positive territory for the year to date. So far in 2013 global equities have been a positive price driver for the oil markets as well as the broader commodity complex.

Yesterday's API report was neutral to bearish showing a much larger build for gasoline stocks but no builds for either crude oil or distillate fuel. Total crude oil stocks were about unchanged versus an expectation for a modest build. Gasoline showed a larger than expected build in inventory while distillate fuel stocks declined versus an expectation for a small build. The API reported no change in crude oil stocks versus an industry expectation for a modest draw as crude oil imports decreased and as refinery run rates decreased by 0.9%. The API reported a small draw in distillate and a build in gasoline stocks.

The API report is neutral to bearish as the adjustments for the end of the year seem to be starting to return to normal. However, over the next several weeks I would expect to see crude oil imports and stocks to continue to rebuild as the industry readjusts. The oil market is mixed heading into the US trading session and ahead of the EIA oil inventory report at 10:30 AM today. The market is always cautious on trading on the API report and prefers to wait for the more widely watched EIA report due out this morning. The API reported no change in total crude oil with PADD 2 stocks increasing by 1.5 million barrels while Cushing stock increased by 1.8 million barrels. On the week gasoline stocks increased by about 4.1 million barrels while distillate fuel stocks decreased by about 0.6 million barrels. 

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