Written on: January 24, 2019

Energy Prices Falling

Thursday, January 24, 2019

Energy prices are losing further ground Thursday, following bearish weekly petroleum inventory data from the American Petroleum Institute and amid some strength in the US dollar, despite strength in global equities. Economic data from Japan and the Eurozone were soft, however. Traders are looking ahead to the European Central Bank policy decision and to weekly US jobless claims data, as well as the weekly inventory report from the Energy Information Administration for further direction.

Inventory figures reported by API yesterday afternoon was bearish all around. API reported a 6.6-million-barrel build in US crude stocks, whereas a 42,000-barrel dip was expected according to a Reuters poll of analysts. Imports rose by 0.69 million barrels per day last week, and runs fell by 0.15mb/d, contributing towards the build. Cushing, OK oil inventories grew by 0.36 million barrels. Gasoline stocks saw a 3.6-million-barrel build, exceeding the 2.7mb build predicted by the Reuters poll, and heating oil stocks saw a surprise 2.6-million-barrel build. The Energy Information Administration is to release its report this morning at 11:00am.

In the news, Reuters reports that Enterprise Product Partners LP’s plan to construct its SPOT Deepwater Terminal to export crude oil off the coast near Houston is being delayed by the government shutdown, as the company is unable to file paperwork with regulators. The terminal is to be capable of loading a VLCC per day, with planned service in January of 2022. In other news from Reuters this morning, the Petroleum Association of Japan says Japanese refiners will likely to continue lifting Iranian crude oil through March, and that the refining industry will push the government to seek an extension of the 180-day US sanctions waivers.

The energy complex saw relatively small, across-the-board losses yesterday amid a marginal increase in Russian oil production even as the OPEC+ output cuts are to have taken effect this month, and generally lackluster economic data releases. Brent crude slipped 36 cents lower, settling at $61.14 a barrel, WTI crude closed at $52.62 a barrel, gasoline futures settled 1.58 cents lower at $1.3857 per gallon, heating oil closed 1.25 cents lower at $1.8886 per gallon and natural gas futures fell 6 cents, settling at $2.980 per MMBTU.