In addition Enbridge’s planned shutdown of the Ozark pipeline for 10 days beginning June 10 will reduce the flow of oil from Cushing. The Ozark pipeline has a capacity of 215,000 bpd moving crude oil from Cushing to Wood River, Ill. Enbridge said June’s capacity will be reduced by 40% or basically by about 2.5 million barrels. This could certainly derail the newly emerged destocking pattern that has been in play in Cushing for the last month or so.
Furthermore the Ekofisk field will be down for maintenance in June, which will result in a decline in North Sea production and will be another short term bullish price driver for the spread. We could see the spread settling into the $8 to $10/bbl trading range during the changing inventory pattern out of Cushing as well as during the maintenance in the North Sea.
The EU Commission is investigating oil pricing assessments in Europe. There are concerns that companies may have colluded in reporting prices to Platt’s for a variety of oil products and biofuels. The target companies are Platt’s, Shell, BP and Statoil.
Global equities rebounded over the last 24 hours as shown in the EMI Global Equity Index table below. The Index is now about unchanged for the week with the year to date gain now at 2.3%. The rankings have remained the same with Japan and the U.S. holding the top two spots while Brazil and China are at the bottom of the leader board… both in negative territory for 2013. Equities were a positive price driver or the oil complex but as discussed above other price drivers offset the equity/oil price relationship.
Tuesday's API report was bearish for crude oil and distillate fuel and mostly neutral for gasoline. There were no major surprises in the API data as most of the data points came in within the range of market expectations. Total crude oil stocks increased by 1.1 million barrels vs. an expectation for a small draw of about 0.2 million barrels as crude oil imports decreased while refinery run rates also decreased by 0.6 percent. The API reported a draw in distillate fuel inventories within the expectations. Gasoline stocks declined within the market projections.