Build In US Crude Stocks Does Little To Impact Prices

On April 17, 2014 by TradingDesk

A 10 million barrel build in US crude stocks reported by the DOE drew much attention from market watchers Wednesday, but did little to impact prices. US crude production reached its highest level since 1987, and PADD 3 crude stocks hit a record high last week. The continued drop in crude stocks at the NYMEX hub in Cushing OK demonstrates that over the past few years, the industry has succeeded in relieving the Midwestern bottleneck for crude supplies. What remains to be seen is how the market will absorb the new glut of crude along the gulf coast. New reports have surfaced that permits have been obtained to import Canadian crude, ship it to gulf coast ports, and then re-export those barrels overseas. The progress of those plans could have a major influence on our market for the next few years.

Meanwhile, refined products are holding their ground north of $3, which threatens another move higher following 2 weeks of heavy buying. Technical indicators remain in overbought territory however, so a short-term pull back remains a threat. With tomorrow being one of only 3 days all year that both the Nymex floor and CME Globex electronic trading platforms are completely shut, I would expect to see choppy trading today as positions are squared ahead of the long Easter weekend. The major fundamental stories of Ukrainian violence and Libyan peace will continue to vie for control of the price action when we return next week.

Ethanol prices continue their implosion in both futures and spot markets this week, although some regional tightness remains due to backlogged rail cars. Prompt Chicago values traded below $2.50 yesterday, just two weeks after trading north of $3.75/gallon.

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