Economist's Insights

Today’s Trading Activity – Oil Drops on Unexpected U.S. Supply Gains

Jun 7, 2017

Plunging oil prices was a major market story from Wednesday’s session. Not only did gasoline supplies grow by the second largest amount since January, but the significant drawdown of crude stocks projected in Tuesday’s industry data failed to materialize. The API rightly predicted the build in gasoline but incorrectly indicated crude inventories shrank by more than 4MM barrels last week. Instead, data from the EIA showed crude inventories grew by 3.3MM barrels; the first weekly increase in two months and the largest since mid-March. The crude build, along with significant increases in crude distillates, was enough to send U.S. crude prices tumbling more than 5% (biggest daily drop since March) to their second lowest level of the year. The other market story was a midday recovery in stock prices and Treasury yields that followed the release of the prepared statement Former FBI Director Comey will make in his Senate testimony. While the statement won’t put the controversy to bed, it apparently wasn’t as damaging as markets had feared. The Dow and S&P both turned positive after the Statement was released and gained 0.2% on the day. The 2-year yield rose 1.2 bps to 1.31% and the 10-year yield added 2.18 bps to 2.17%.