Both Brent and WTI crude prices continued to rise over
the past two weeks as ongoing speculation over the ultimate
success of an OPEC initiative to curb member nation
production thereby addressing global crude surpluses
continued to influence market dynamics. The emergence
of Russia as a supporter of the OPEC plan further
underpinned market pricing though a strengthening US dollar
ended to curb price escalation.
With regard to refined
products, the onset of winter blending and the prospect of
colder weather has served to significantly impact distillate
pricing. High demand related to seasonal harvesting
activities further pressured distillate pricing. With
the end of maintenance season in sight and the related
return to full production of the refining industry, gasoline
prices should stabilize going forward. Gasoline prices
had been impacted in recent weeks by both reduced production
and supply interruptions. The return to service of the
Colonial Pipeline coupled with reduced seasonal demand
should serve to exert a downward pressure on gasoline prices
in the near future.
The US Energy Department
("DOE") weekly petroleum inventory assessment, issued
October 12, 2016, reported an increase in US crude stocks of
US gasoline inventories decreased
by 1,905,000 barrels over the previous reporting period. Implied
demand decreased by 126,000 b/d.
US distillate inventories
decreased by 3,720,000
utilization rates decreased by 2.8% to 85.5% of capacity.
Year over Year
Source: DOE October 12, 2016