Prices Are Taking A Breather This Morning As Prices Continue To Slog Through Their Sideways Summer Trading

Gasoline prices led the energy complex higher Wednesday as we approach the holiday weekend with record setting travel volumes expected in the US. Prices are taking a breather this morning as prices continue to slog through their sideways summer trading pattern with no clear direction on the charts, and plenty of fundamental discord to keep traders guessing.

The US commerce department revised its Q1 GDP figures up to 2% growth from earlier estimates of 1.3%, a major correction for that report, primarily reflecting stronger export activity (thanks oil) and consumer spending.   

While a 10-million-barrel drop in oil inventories grabbed the headlines yesterday, perhaps the most bullish numbers from the DOE’s weekly report was strong export figures that show crude oil shipments out of the US at their 2nd highest level ever, and diesel shipments at their highest level of the year. Propane and propylene shipments also surged to a new record high, which certainly suggests that there are plenty of international buyers for US petroleum products, despite so many warnings of a looming recession.

While the SPR continues to drop to multi-decade low levels, despite the DOE’s proud announcements of purchases to refill the reserve, the Cushing OK hub has stockpiles steadily growing and reaching a 2-year high last week.

Average retail diesel prices are down almost $2/gallon from year-ago levels as the supply crunch so feared over the winter never materialized. PADD 1 diesel stocks however have dropped below year-ago levels this week for the first time since January, despite another very weak demand estimate last week that puts total US diesel consumption below the COVID summer of 2020 levels. Gulf Coast diesel supplies are ample however, holding near their 5-month average, which is putting downward pressure on forward basis values.

Today’s interesting read: Are Indian refiners reaching the limits of their Russian oil binge?

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