Tropical storm Rina is now abut 60 miles south of Cozumel, Mexico and is tracking to the north.
Weakening continues as the storm moves north and on Friday more toward the northeast and east before
turning south during the weekend and moving toward the northwest Caribbean by late weekend. The
general trend of weakening should continue through the weekend.
The area of low pressure in the western Caribbean Sea still shows no sign of development but is still
triggering areas of showers and squalls. The area of low pressure continues to make its way slowly to the
west-northwest.
*EIA: US Total Working Gas In Storage +92 Bcf At 3716 Bcf
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Hurricane Rina has weakened to a category 1 hurricane with 85mph winds. It is currently located about
175 miles to the south-southeast of Cozumel, Mexico and is moving to the west-northwest. A more
northwesterly turn may be underway as the hurricane approaches the east coast of the Yucatan
Peninsula. Further weakening is expected as it interacts with the landmass to the west and increasing
strong winds aloft along abundant dry air to the northwest and north. The system is forecast to track more
northerly tomorrow turning northeasterly Friday as it clears the peninsula and then heads for western
Cuba. The weakening trend is expected to continue into the weekend.
The area of low pressure in the south-central portions of the Caribbean Sea has shown no indication of
development. It is however still producing bursts of showers and squalls. Even though conditions remain
marginal for development this system will continue to be monitored.
Category 2 (110mph sustained winds) hurricane Rina is now about 230 miles south-southeast of Cozumel,
Mexico and is moving slowly to the west. Further strengthening is possible today-tonight as Rina could
become a major hurricane (category 3 with winds in excess of 110 mph). Rina is forecast to turn toward
the northwest today and brush the east coast of the Yucatan Peninsula tomorrow and early Friday before
curving more toward the northeast and east by the weekend and moving close to western Cuba.
An area of low pressure has weakened overnight and is currently located in the central and south-central
Caribbean Sea. Conditions will remain marginal the next day or so for any development as the system
moves to the west-northwest.
US Crude Stocks- Up 4.735 MB (Cushing Stocks – Up 0.419 at 31.511 MB)
US Gasoline Stocks- Down 1.353 MB
US Distillate Stocks- Down 4.275 MB
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Yesterday the API reported that for the week ending October 21 U.S. commercial crude oil inventories rose 2.712 million barrels, well beyond consensus expectations. A recovery in imports on a DOE basis is also likely and in tandem with low crude oil runs stocks could in fact have increased by this magnitude or even greater. In addition, as we have previously discussed there is no consistent pattern of net stock draws or builds for the month of October. Our guesstimates would suggest a more modest build than the API indicated, but given where prices are in comparison to our Base Case there is scope for some “backing and filling” in case the numbers disappoint.
For products, the API reported a 153,000 barrel gain in gasoline supplies in contrast to expectations of a decline, impacted by higher imports. Our numbers also assumed a recovery in imports but also somewhat higher implied demand to revert to our estimated mean leading to a small draw, less than the market is looking for. If demand remained steady, however, the numbers would easily imply a build on a DOE basis. Finally, the API reported a 1.822 million barrel draw in distillate supplies, somewhat more than analysts’ estimates. As we have previously discussed, we would be looking for some retracement in implied demand leading to less constructive distillate stock data, given that demand has exceeded 4.0 MMB/D for three weeks in a row now. We believe demand “should be” averaging a bit lower than this, given the estimated reduction in discretionary driving by diesel car owners, more than offset by the rise in diesel demand almost in tandem with manufacturing activity. If demand remains above 4.0 MMB/D for the fourth week in a row, it may suggest, assuming we have a reasonable handle on exports, that manufacturing activity is doing somewhat better than we have assumed.
