Bullish and Bearish News Offset Each Other

WTI crude closed higher yesterday on the news of Saudi supply cuts and the hope for additional economic stimulus due to the Senate races’ results in Georgia. Both Senate seats went to Democrats, giving them a majority in the Senate and increasing the chances of another round of coronavirus stimulus. The market is relatively flat this morning as traders weigh violent protests in Washington against earlier bullish news.

The market is also considering the impact of large product builds reported by the EIA to start the year. The large build in products was offset somewhat by a larger-than-expected draw in crude; however, the coronavirus lockdowns and travel restrictions put a dent in demand in Q4 as it did through most of 2020. Crude stocks ended Q4 2020 well above the five-year average.

Diesel inventories had been above the five-year range in Q3, but Q4 stocks returned to levels within th.e range while remaining 6% above the 5-year average to close the year. Gasoline started the quarter near the five-year average, only to expand the spread as Q4 continued even treading above the five-year range in November and December, only to return to lower levels. It closed the year 1% above the five-year average.

The EIA reported a larger-than-expected draw for crude of 8.0 MMbbls, compared to an expected decrease of 1.5 MMbbls. At Cushing, the EIA reported that stocks increased by 0.8 MMbbls. US crude oil inventories are about 9% above the five-year average for this time of year. Distillates reported a build and continue to trend roughly 4% above the five-year average. Gasoline inventories had a build and are at the five-year average.

Crude prices are relatively flat this morning.  WTI Crude is trading at $50.69, a gain of six cents.

Fuel is mixed in early trading this morning.  Diesel is trading at $1.5373, a gain of 0.9 cents.  Gasoline is trading at $1.4671, a loss of 0.8 cents.