Crude And Heating Oil Prices, Both Trading 1.8% Higher To Start The Day

Energy prices are bouncing this morning, led by crude and heating oil prices, both trading 1.8% higher to start the day. There’s little in the way of a fundamental reason for today’s buying action, quite the opposite actually, as the American Petroleum Institute estimated an across-the-board build in petroleum inventories on their status report published yesterday afternoon.

Petroleum futures are rather taking their cue from equities this morning as they bounce back from Monday’s bloody selloff on recession worries. The dramatic tension and speculation surrounding Iran’s imminent retaliation against Israel is adding to the bullish fervor.

The Department of Energy will publish their official weekly petroleum balance sheet at its regular time this morning (10:30 EDT).

A fire broke out at Delek’s refinery in El Dorado Arkansas yesterday afternoon with no injuries reported. There hasn’t been any indication on the scope of the disruption at the 85mbd plant, the Gulf Coast spot market traded on indifferently.

Tropical storm Debby continues to churn on the Southern Atlantic seaboard this morning, drenching the Georgian and South Carolinian coasting with its slow-moving deluge. The fourth-named storm of this season will almost make it all the way past North Carolina before being downgraded to a tropical depression, extending its flash-flooding potential as far north as Raleigh over the next three days. No notable disruptions to terminals or pipeline reported so far.

From the EIA’s Short Term Energy Outlook:

• Crude oil prices are expected to rise in the back half of 2024 due to falling global oil inventories caused by OPEC+ production cuts.
• Global oil demand is still rising but at a slower pace than previously forecasted, mostly due to reduced Chinese consumption.
• Increased air travel, exceeding that of pre-pandemic levels, is poised to boost jet fuel prices in 2025, more so than all other refined products.
• Nat gas prices are expected to remain low until late 2024, leading a deceleration of increasing residential electricity prices.
• It can be said with 95% certainty that WTI prices will be between $40 and $120 per barrel by the end of 2025, and you can take that to the bank.