Energy Complex Continued To Fall Yesterday
The energy complex continued to fall yesterday, wiping out early gains that positioned futures for a bounce. Tuesday’s price action saw refined product benchmarks break away from equities markets, which staged a recovery rally after Monday’s brutal selloff, and are now approaching June lows this morning in pre-market trading. Prompt month RBOB futures are down almost a 2 cents while HO has shaved off over 3 cents.
The American and European crude oil benchmarks seem to be leading energy prices lower this morning, both off around $1.20 and $.85 cents per barrel, respectively. Today’s selling seems to be a product of momentum trading with no new headlines guiding prices lower and major technical support levels within reach of being tested.
The EIA released its monthly Short-Term Energy Outlook report yesterday, confirming lower oil demand estimates for the rest of 2019 and 2020. While the global oil supply glut may have hid from traders for a time, overshadowed by overseas tensions and OPEC production cuts, or talk thereof, it seems that fundamental state of more supply than demand has now returned to the foreground and has incited selling pressure.
The American Petroleum Institute estimates a crude oil draw of around 3.5 million barrels last week which, if confirmed by the Department of Energy’s inventory report due out at 9:30am CDT, would send national stocks down for the 8th week in a row. Likewise gasoline inventory is expected to move lower by just over a million barrels while diesel stocks are estimated to build by the same amount.