WTI crude prices opened the week on Monday at $53.15/b, which was $0.28 below the previous Monday’s opening (January 23rd.) Tuesday’s and Wednesday’s prices were mainly in the $52.50-$53.50/b bandwidth. Thursday brought a rally that brought prices above $54/b at the high end, but the day closed back at $53.54/b. Friday’s opening was up by 11 cents, at $53.68. Over the week, this was an increase of $0.53, or 1.0%. During the week, prices ranged from a low of $52.24/b on Tuesday to a high of $54.34 on Thursday, a range of $2.10. Current prices are $53.66/b, in the black for the week if they are maintained today.
This week, Reuters news service and other market experts prepared estimates of OPEC production for the month of January. These estimates place OPEC compliance levels at approximately 80%, which is far above what many market watchers had anticipated. This appears to be the chief motivation for forward buying. Prices are also receiving support from a weaker U.S. Dollar. The U.S. Dollar Index fell by approximately 3% during the month of January. The Fed announced its decision to leave interest rates unchanged, and noted an expectation that the U.S. economy would continue to grow at “a moderate pace.”
The U.S. jobs report was just released, showing that payroll employment rose by a very strong 227,000 in January. The unemployment rate was 4.8%, relative to 4.7% in December.
The week’s supply and demand fundamentals were bearish. The EIA data on oil stocks showed increases across the board: Crude stock additions of 6.466 mmbbls, gasoline stock additions of 3.866 mmbbls, and distillate stock additions of 1.568 mmbbls. Crude and product inventories also expanded last week. Apparent refined product demand for the month of January has been weak, with significant drops in demand for gasoline, jet fuel, and distillate. According to EIA preliminary supply data, refined product supplied in January 2017 was 273 kbpd lower than product supplied in December 2016. U.S. crude production is on the rise.
Distillate prices opened Monday at $1.6189/gallon. They opened this morning at $1.6586/gallon, an increase of 2.5%, or 3.97 cents, for the week. Prices ranged from a low of $1.60/gallon on Tuesday to a high of $1.6983/gallon on Thursday, a large range of 9.38 cents. Prices are currently $1.6486/gallon, 0.32 cents below Thursday’s close.
Gasoline RBOB prices opened Monday at $1.5222/gallon. Today’s opening price of $1.536/gallon was an increase of 0.9%, or 1.38 cents, for the week. Prices ranged from a low of $1.4991/gallon on Monday to a high of $1.5919/gallon on Thursday, a range of 9.28 cents. Prices are $1.5224/gallon currently, a drop of 1.05 cents below Thursday’s close.