Oil Pulls Back After Rally While Distillates Extend Gains

Energy futures are taking a breather this morning a rambunctious Tuesday saw NYMEX HO add another 30 cents to its prompt month contract. Gasoline futures are down 3 cents in pre-market trading while both WTI and Brent shed around $2 each. The distillate component of the energy complex is the only hold-out, making paltry gains to start the day.

The breakdown of the Ukraine-Russia truce on energy infrastructure strikes, along with reports that the Saudi east-west pipeline will be down for several weeks, remain the most influential headlines in terms of global energy fundamentals.

The Fed will conclude it’s two-day meeting this afternoon and is expected to raise interest rates for the first time since 2023, which is half-heartedly being pointed to as a reason for today’s profit-taking. While a rate hike might hamper some oil demand via a general economic slowdown, it’s tough to envision that impacting global ULSD demand/prices. We will find out if the market agrees in about 5 hours.

The API reported builds across the board yesterday afternoon with crude oil inventories up around 7.1 million barrels, gasoline and diesel up 1.5 and 1.6 million barrels, respectively. The crude oil number seems to be taken the most seriously this morning with WTI down around 2%, outpacing its European counterpart and its refined product progenies. The DOE will publish their official snapshot at the regular time this morning (10:30am EDT).

The National Hurricane Center is tracking an area of interest in the Atlantic as of yesterday. The NHC originally gave the area around 40% odds of organizing, but downgraded those chances down to 30% over the next week, this morning. As of now its projected path, regardless of intensity, has it staying well away from the Eastern Seaboard.