Markets are trading up this morning continuing in yesterday’s momentum. Crude ended the day 52 cents higher on Monday, despite some early morning weakness. This morning, WTI Crude is trading at $67.40, a gain of 97 cents (1.5%).
Fuel prices tracked crude closely yesterday with both products closing higher. Gasoline made upward strides, gaining over 3 cents due to refinery issues in the Gulf Coast and the Northeast. This morning, diesel prices are trading at $2.1296, a gain of 1.6 cents. Gasoline prices are $2.0287, leading the complex higher by 1.4 cents.
Clear directional signs are lacking as the market continues to digest a variety of national and international headlines. On the global front, Venezuela has reached a $2 billion settlement with ConocoPhillips for the expropriation of its Caribbean assets. This agreement will allow PVSD, the state-owned oil company, to resume operations on the island refinery as long as payments are made on-time to ConocoPhillips. Iraq will be dispatching a delegate to Washington to request an exception from U.S. Iranian sanctions due to fear of shortages.
Chinese importers have switched to using Iranian flagged crude tankers to continue purchasing oil while European companies are beginning to wind down crude imports from Iran. Yesterday, the U.S. announced the government’s plan to release 11 MMbbls from the Strategic Petroleum Reserve (SPR). Many refiners are not happy with the timing of the release as it will coincide with the historical fall turn-around maintenance season, taking many refiners off the market during the release.
This week’s inventory reports will likely only add uncertainty to the market. A survey found that markets expect Cushing inventories to rise again this week, while crude and products will draw overall. As mentioned before, Cushing, OK is the delivery point for WTI crude, making it symbolically important for the contract’s price direction. A rise in Cushing stocks could put downward pressure on prices, even if crude and product stocks decline.
This article is part of Crude