Crude and Refined Products Extend Gains

Wednesday, August 21, 2019

Crude oil and refined products are extending their gains on Wednesday following supportive crude and gasoline inventory data reported by the American Petroleum Institute, news that the government of Alberta, Canada plans to extend its restrictions on crude production in the region by another year, through 2020 and strength in European equities and major US stock market index futures. The Energy Information Administration is expected to release its Weekly Petroleum Status Report this morning.

API data released last night were supportive for crude oil and gasoline, but unsupportive for distillates. The institute reported a larger than expected withdrawal of 3.50mb from US crude inventories for the week ended August 16th, compared with an expected decline of 1.89mb. Crude stocks at the Cushing, OK delivery hub fell by 2.80mb. Also, slightly supportive, gasoline inventories decreased unexpectedly, by 0.40mb, while analysts expected to see an increase of 0.17mb. On the other hand, the institute reported a build of 1.80mb in distillate stockpiles for last week, topping a predicted increase of 0.31mb by analysts.

In other news, Reuters sources said that Russia’s largest oil producer, Rosneft, notified its buyers early this month that all future tender contracts for its oil products will be denominated in euros instead of US dollars, with Reuters pointing to Russian intent to reduce any negative impact of US sanctions on Russia. In separate news, Greece said today that it has no plan to help Iranian oil tanker Adrian Darya 1 transport its oil to Syria.

There was little economic news released overnight. Market participants looked ahead to the July CPI for Canada, as well as July existing home sales for the US and minutes from the Federal Open Market Committee’s latest meeting for further direction.

Energy futures traded slightly higher yesterday, amid weakness in the US dollar, but despite losses in US stock market indexes. WTI crude added 13 cents for a $56.34 per barrel settlement, Brent crude gained 29 cents to close at $60.03 a barrel, heating oil closed 2.12 cents stronger at $1.8543 per gallon, gasoline strengthened 1.67 cents to settle at $1.6811 per gallon and natural gas futures rose 80 points to close at $2.218 per MMBTU.

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