Can sliding crude oil and product prices be spun as an economic growth-stimulating move yet? Down another 2.2% in early action, WTI crude drops below $80 per barrel for the first time since the early summer of 2012.
Heading into the winter, heating oil (NYSEARCA:UHN) at $2.43 per gallon has dipped below that summer 2012 price to its lowest level since late 2010.
In a bear market any news will do, and IEA earlier slashed its outlook for oil demand - with expected growth in 2015 now about 300K barrels per day less than previously estimated.
WTI crude (NYSEARCA:USO) is down 4.2% to $82.25 per barrel, the weakest print since late-June 2012. As the country moves into heating season, heating oil (NYSEARCA:UHN) - down 3.3% today to $2.47 per gallon - is also at its lowest since the early summer of 2012. The U.S. Gasoline Fund (UGA -3%).
Carving out a moderate advance, the major averages are getting no help from the energy sector (XLE -0.5%).
The path of least resistance for crude oil remains down, and the selling continues following yesterday's losses amid plunging stocks, lowered growth forecasts from the IMF, and the EIA cutting its oil consumption estimates for this year and next.
One month ago, the EIA called for international consumption of 91.55M barrels/day in 2014 and 92.89M in 2015. The latest forecast says 91.47M and 92.71M, respectively.
In other news, oil coming from the Bakken Shale boom might have another large customer as companies are plowing ahead with rail depots in California which will allow that state's refiners to take advantage of cheaper U.S. supplies.
Energy stocks, especially refiners, are taking a beating following the latest EIA inventory report that said gasoline stockpiles rose by 2.4M barrels last week, helping send U.S. crude oil futures to 16-month lows (-1.2% to $91.61/bbl) and Brent crude to 17-month lows (-1.1% to $98.02).
The report is bearish given the large increases in refined product inventories; "even though the crude drawdown was close to expectations, it seemed to disappoint," Again Capital's John Kilduff says.
The EIA report followed the agency’s updated demand growth report issued yesterday and this morning’s release of OPEC’s report on the oil market; both see lower demand growth this year and next.
Oil majors are mostly lower: XOM -0.6%, CVX -1.4%, COP -0.3%, but BP (+2.9%) and RDS.A (+1%) are higher.
Crude rallied hard into the close on Friday, perhaps over worry of some geopolitical blow-up over the weekend, but - with no blow-up forthcoming - it's resumed its slide, off 1.4% to $96.04 per barrel - right around the lowest since late January.
"The world has changed," says energy market analyst Daniel Dicker, noting conflicts in Russia/Ukraine, Iraq, and Syria, along with destabilization in Libya and Egypt - had they happened a few years back - would have sent prices soaring. What's different today, he says, is the exit from trading by the large investment banks. "This has taken an enormous amount of speculative steam out of the oil trade."
“Despite armed conflict in Libya, Iraq and Ukraine, the oil market today looks better supplied than expected, with an oil glut even reported in the Atlantic basin," says the International Energy Agency in its monthly report.
Alongside the bearish supply outlook, the IEA cut its global demand forecast for this year by 180K barrels per day to 1M. Demand is expected to rise to 1.3M barrels per day next year.
WTI crude is down 0.9% to $97.19, its lowest price since February. USO -0.6% premarket
The API late yesterday reported a 3M barrel build in domestic supplies, a number the EIA is expected to confirm in its own report at 10:30 ET.
WTI crude (USO) is off 1.9% to $96.48, the lowest price since late June. Brent crude (BNO) isn't off nearly as much and the spread between the two has widened to a 6-month high of about $12 per barrel.
Behind the stock build and lower U.S. prices could be refinery maintenance shutdowns. Fewer runs mean lower demand for crude, but also mean less product - gasoline and distillate supplies are both expected to print lower in the EIA report.
It seems like we can have higher stock prices or lower crude oil prices, but we can't have both. Crude continues a 6-week rally, moving to its highest price since spring at $94.24. The gasoline ETF: UGA +14.9% in the last month. Earlier, inventory data showed an unexpected draw on stocks.
Crude futures tumble 2.3% to $82.86. Natural gas (-0.9%) and gasoline (-1.3%) aren't looking too hot either. Disappointment from lack of Fed easing hints? Concerns over upcoming China data? Or just a general bearish sell-off?