In addition last week issues with the flow of Canadian crude oil into the U.S. on the Keystone pipeline resulted in a net reduction into Cushing. The flow of Canadian crude oil into Cushing is now averaging about 40 mbpd below the level it was in the middle of April or prior to the start of all of the interruption issues on the Keystone line from Hardisty that occurred over the last month or so.
The spread is now back in the new lower technical trading range it was in early last week of $8.25 on the upper resistance end and $5.30/bbl on the lower support side of the range. From a technical perspective the spread seems to be entering another narrowing pattern.
Global equities continue to be supported to the upside by the easy monetary policies as shown in the EMI Global Equity Index table below. The Index gained another 0.55 percent since yesterday and is now higher by 1.4 percent for the week. The year to date gain is now at 4.4 percent making another new high for the year. Japan’s bourse broke the 50 percent gain level overnight as the faltering Yen continues to support this export driven economy. Brazil remains the only laggard in the Index but the loss for 2013 has declined to well below the double digit level. Global equity markets have been a positive price support for the oil complex.
Tuesday's API report was bearish across the board with builds for the three main oil commodities. Total crude oil stocks increased by 0.5 million barrels versus an expectation for a small draw of about 0.3 million barrels as crude oil imports increased marginally while refinery run rates decreased by 1.5 percent. The API reported a smaller than expected build in distillate fuel inventories. The large build in gasoline stocks ahead of the upcoming holiday weekend in the US was the big surprise in the report.