On Wednesday, OPEC+ agreed to ease oil supply curbs that occurred in August, in turn dropping oil prices. As the economy tries to rebound from the COVID-19 pandemic, there are fears that the virus could unleash a second wave and compromise the slowly rebounding market. Since May, OPEC+ have cut output by around 10% of the global supply of oil due to fact that coronavirus wiped out over 20% of global fuel demand.
Stocks rallied on Wednesday after a report from Moderna, Inc. said they confirmed successful COVID-19 vaccine trial tests. Throughout the day, the S&P 500 reported a 29 point gain, or just under 1%. On July 27, Moderna reported that they will be conducting a 30,000 person clinical trial. Positive results from the trial will further solidify the possibility of a successful vaccine entering the marketplace. Driven by the thought of an eventual coronavirus vaccine, the market continues to rebound from the devasting effects of COVID-19.
The EIA reported a decrease for crude inventories of 7.5 MMbbls, versus an expected decrease of 2.1 MMbbls. In addition to the headline crude draw we reported yesterday, distillates also reported a surprise draw, though stocks remain 26% above the five-year average. Diesel demand rose by 673 kbpd to 3.7 MMbpd last week, still down about 1 MMbpd from the levels reported before lockdown. The EIA reported the diesel draw after the API estimated an increase of 3.0 MMbbls. There is still a demand for diesel, showing that demand is rising and the economy is also getting better after reports of a eventual COVID-19 vaccine. Gasoline reported a draw in stocks and is now just 7% above the five-year average.
Crude prices are down this morning. WTI Crude is trading at $40.64, a loss of 56 cents.
Fuel is down in early trading this morning. Diesel is trading at $1.2301, a loss of 1.5 cents. Gasoline is trading at $1.2477, a loss of 1.7 cents.