Energy markets ignored a likely cut in production by OPEC later this week, with markets moving sharply lower on Wednesday, following another bearish inventory report from the government.
Traders expected bearish news and they got even more than they bargained for. Total crude oil stocks rose 3.2 million barrels in the latest week, almost 25% more than expected. Gasoline supplies were up 2.7 million barrels, 100,000 less than anticipated. But the real bearish news came in distillates, which were up 2.2 million barrels, compared to expectations for a 100,000 barrel build. Both diesel fuel and heating oil showed an increase in inventory levels.
Stocks continue to build as demand falls despite lower prices that have seen dramatic cutbacks in recent weeks. Diesel prices fell almost 20 cents a gallon for the second straight week, though basis with heating oil futures remains high. Agricultural demand continues to support he basis, which should weaken into the first of the year. To read Bryce Knorr's complete weekly energy review, click HERE.