It's Sunshine on the Shoulder season as U.S. refineries slow runs to 87.8% of capacity, running just 15.9 million barrels, the lowest level of the year as seasonal maintenance flips into high gear. The trade seemed disappointed that the overall 3-million-barrel build in crude oil supply was higher than expected. That is what should you expect when seasonal maintenance is happening.
In fact, with U.S. production back on the rise, the question should be why did we not see a bigger jump in crude supply? The EIA reported that production rose to 10.23 million barrels a day! So where is all that oil going? We even saw a surprise 1.128 million barrel drop in Cushing Oklahoma crude supply and a drop in Midwest supply. The surge in supply came in the Gulf Coast as they saw a 4.55-billion-barrel increase in supply as fog lifted and tankers could unload two weeks of supply. Yet, with hedge funds trying to lock in profits before the end of the month, so they get paid, along with a weak stock market, caused a last day of February price drop.
Today warnings about a spike in gas and diesel prices this spring is a reason why we should find some support soon. Today the key will be Fed Chair Jerome Powell's testimony as traders on oil are now focused on interest rates and stocks.
Wall Street Journal reports that forecasts for crude oil prices rise for the fifth straight month as many are catching up to the Energy Report forecast as it is becoming clear that we are seeing balanced oil markets in 2018 and confidence in cuts to oil production by OPEC will actually balance the market. Gee, I wonder where we have heard that before? The Journal writes that “banks raised their forecasts for oil prices for the fifth month in a row in February, signaling continued confidence that prices will continue to recover as the global supply glut drains due to production cuts.” Brent crude—the global benchmark—is now expected to average $62 a barrel this year, while West Texas Intermediate, the U.S. standard, should average $58 a barrel, according to a poll of 15 investment banks surveyed by The Wall Street Journal toward the end of February. Both predictions are up roughly $1 from the January survey.
