The somewhat unexpected outcome of the Brexit vote and the resulting uncertainty over the future of the European economy dramatically impacted crude pricing which after having achieved $50.00 per barrel only two weeks ago dropped off earlier this week to the mid-forty range.  The situation has been compounded by a related rise in the value of the US dollar which typically is inverted to trending crude pricing.  Profit taking ahead of the UK vote also contributed to the situation.  Once the market digested the Brexit situation recovery back to the $50.00 per barrel level was observed.  Going forward continued uncertainty over European economic health and prevailing surplus position of global crude supply should serve to cap the recent escalation of crude pricing.

With regard to refined product pricing, the continuing surplus position of gasoline inventories (16% above 5 year average) despite the existence of strong demand should serve to minimize escalation of wholesale gas pricing in the coming months.  A strong export demand to Latin America and Europe, speculative buying for storage and intermittent refinery outages have combined to exert upward pressures on distillate pricing this season thus far. 

1. Platts Inventory Update:

The US Energy Department ("DOE") weekly petroleum inventory assessment, issued June 29, 2016, reported a decrease in US crude stocks of 4,053,000 barrels.

US gasoline inventories increased by 1,367,000 barrels over the previous reporting period.