On Wednesday, WTI crude closed relatively unchanged. However, crude is moving lower in early trading this morning. Fed comments from the Federal Open Market Committee (FOMC) meeting minutes regarding the slow pace of economic recovery gave pause to equities and oil markets, although weakness in the dollar helped to support oil prices. “Participants generally agreed that prospects for further substantial improvement in the labor market would depend on a broad and sustained reopening of businesses. In turn, such a reopening would depend in large part on the efficiency of health measures to limit the spread of the virus,” the FOMC meeting minutes said. The S&P 500 is coming off of all-time highs this week, but the FOMC minutes helped to put downward pressure on markets, capping gains.
OPEC+ met yesterday to discuss actions to be taken regarding production cuts. In August, cuts were relaxed to 7.7 MMbpd from the previous historic cut level of 9.7 MMbpd. This week’s discussions centered around compliance with existing cuts and over compliance in August and September from some members who had under compiled during June and July. OPEC is expecting the global economic recovery to continue. “Based on the average projections of various institutions, including OPEC, EIA, and the IEA, it is estimated that the world will reach about 97% of pre-pandemic oil demand during the fourth quarter – which is a big recovery from the huge falls in April and May,” said Saudi Energy Minister Prince Abdulaziz bin Salman. The primary takeaway from the meeting was that OPEC+ would stay the course and continue with planned cut levels in the coming months.
The EIA reported a decrease for crude of 1.6 MMbbls, versus an expected decrease of 2.7 MMbbls. At Cushing, the EIA reported that stocks fell by 0.6 MMbbls. US crude oil inventories are about 15% above the five-year average for this time of year. Distillates reported a small surprise build and continue to trend roughly 24% above the five-year average. Gasoline inventories had a moderate draw and are about 7% above the five-year average.
Crude prices are down this morning. WTI Crude is trading at $41.63, a loss of $1.30.
Fuel is down in early trading this morning. Diesel is trading at $1.2222, a loss of 2.9 cents. Gasoline is trading at $1.2519, a loss of 3.9 cents.