The U.S. Energy Information Administration reported that crude supplies dropped 6.9 million barrels, higher than estimated at 425,000 barrels. Gasolines stockpiles rose by 3.6 million barrels, while distillate stockpiles dropped 3.9 million barrels. 

This is the lowest level for crude since February 27, 2015. WTI oil pared its losses since the report, and is now positive and currently trading at $64.05.

OPEC

The Organization of the Petroleum Exporting Countries raised its forecast for oil supply from non-member countries in 2018. In their monthly report, OPEC noted that outside producers would increase supply by 1.15 million barrels per day this year (bpd), higher than 990,000 bpd expected previously. OPEC noted, “Higher oil prices are bringing more supply to the market, particularly in North America and specifically tight oil.” In addition, OPEC’s forecast for U.S. output growth in 2018 was revised up by 110,000 bpd to 820,000 bpd, as higher oil prices encourage U.S. shale drillers to increase production.  Venezuela said to OPEC that its production fell by about 216,000 bpd to 1.621 million bpd in December, while the UAE told it cut output by 38,000 bpd to below its OPEC target.

The Dow and S&P500 are lower after yesterday’s huge gains, while the Nasdaq has now turned positive.  Technology and Telecom sectors are strong, while Consumer Staples, Energy, Health Care, Real Estate and Utilities lag.  Decliners outpace advancers 2030/866 on the Dow and 1695/1122 on the Nasdaq.

The greenback is lower today, trading slightly above the 3-year low of 90.104, on worries that the government may shut down in less than 24 hours.  However, House Speaker Paul Ryan, believes the House will be able to pass a short-term funding bill.  The Senate is not nearly as “confident” and many are not in favor of an additional stopgap measure. John Thune, the 3^rd ranking GOP Senator is “concerned” the Senate will not attain the 60 votes necessary for a bill to pass. 

Also, adding to the dollar’s weakness since 2017 is the diversification of central banks, global investors and sovereign wealth funds into other currencies.  In November, China and Japan cut their holdings in U.S. Treasuries and money flowing out the greenback by global central banks have been going into pounds and euros. In addition, central banks are expected to follow the Fed and begin to end the quantitative easing and other measures that were put in place due to 2008 recessions spurred by the financial crisis.