Markets Soften Despite Moderate Crude Draw

FUELSNews will resume on Monday, April 5. The Mansfield Supply & Marketing Team wish you a peaceful Good Friday!

Despite a small surprise draw in crude inventories, crude prices ended Wednesday off by nearly a dollar. Fuel prices also shed 2-3 cents. Markets are watching OPEC+ for a decision today about their future production. Most expect the group to continue with its existing production level, mean the 7+ MMbpd cuts remain in place. In addition, Saudi Arabia is expected to maintain their 1 MMbpd cuts. Assuming the group adheres to expectations, expect continued steady trading. The group could surprise by extending current levels for longer than expected (lifting prices), or by increasing supplies in the short-term (lowering prices).

The EIA released their weekly inventory report yesterday, which showed crude inventories falling by 0.9 million barrels (compared to a meager 0.1 MMbpd expected build). Refiners are emphasizing gasoline production heading into what’s expected to be a busy summer driving season. Production of gasoline climbed by 0.6 MMbpd to 9.5 MMbpd, the highest since March 2020. Overall, refiners increased total utilization to 83.9%, below normal but strong compared to the past year.

Biden rolled out his infrastructure plan yesterday, which aligned with expectations. The administration wants to spend nearly $2 trillion over the next several years on infrastructure, home care, Medicaid and disability benefits, and R&D and manufacturing. While infrastructure tends to be a bipartisan issue, there’s still plenty of room for debate on both sides around how to spend tax dollars and how to pay for the bill. The White House has proposed raising corporate taxes to pay for his proposal, eliciting opposition from Congressional Republicans. There’s a long road ahead before the legislation becomes law, so the end package – and its impact on oil prices – will likely change over time.