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Latest Post November 17, 2017

Oil prices continue their downward move

Recap: Oil prices continued their downward move, however, the sell-off appears to be tempering. Thursday’s session was the second in a row to post higher lows, indicating a slow-up by bears. The pullback from recent highs is not surprising given the downbeat forecast for demand growth and less than stellar data economic out of China. This took the wind out of the geopolitical rise that was attributed to conflicts in the Middle East. December WTI fell 19 cents, or 0.34%, to settle at $55.14 barrel, while Brent for January delivery settled at $61.36 a barrel, down 51 cents, or 0.82%.

December RBOB fell 1.4% to $1.714 a gallon and December heating oil shed 0.4% to $1.902 a gallon.

Fundamental News: The head of the IEA, Fatih Birol, said the US will, in the long term, become the leader of oil and gas production worldwide.  He said the IEA expects oil markets to rebalance next year if oil demand remains more or less as high as it is today and if OPEC and non-OPEC continue with their production cuts.

Genscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending Tuesday, November 14th fell by 2,904,546 barrels on the week and by 1,720,829 barrels from Friday, November 10th to 62,851,901 barrels. 

The AAA reported that about 50.9 million Americans will travel 50 miles or 80 km or more away from home on November 22-26, a 3.3% increase over last year and the most since 2005.  The largest share of travel, about 89%, will be on US roads. 

Iraq’s Oil Ministry reported that a Turkish energy delegation has met with Iraqi top oil officials in Iraq to discuss issues including the resumption of Kirkuk oil exports via the Turkish port of Ceyhan. 

Mexico is seeking to stock up on diesel fuel before market liberalization measures take effect.  Pemex has been on a buying spree of about a tanker load of diesel a day from the US and recently purchased diesel from as far as the UAE and China.  Mexico is set to increase price limits on the fuel, making 2018 prices uncertain. 

Saudi Arabia’s Energy Minister, Khalid al-Falih, said it was too early to make an assessment on a possible extension to global oil output cuts but that the market would still not be balanced by March.  He said a decision will be made in two weeks on a possible extension. 

Citigroup analysts stated that Russia would be able to quickly restart 95% or 285,000 bpd of the 300,000 bpd of production it shut in under the OPEC-led output cut agreement once the deal expires.  It said cutting back highly productive new wells was likely Russia’s primary strategy when the country agreed to the cuts. 

Ecuador’s Oil Minister, Carlos Perez, said the country has temporarily shelved a plan to ask OPEC for an exemption from its oil production cut as measures adopted by OPEC are working to support oil prices.  He said the country will follow OPEC’s decision on production. 

Anadarko Petroleum Corp forecast an 11% increase in sales volumes for 2018 as shale production increases oil output.  It expects to sell 245-255 million barrels of oil equivalent in 2018, higher than the 224-228 million bpd of oil equivalent for 2017.  The company expects to spend $4.2 billion to $4.4 billion for 2017 and $4.2 to $4.6 billion in 2018.

ABN Amro forecast that the price of WTI is expected to reach $70/barrel and the price of Brent is expected to reach $75/barrel by the end of 2018.  It said the market will increasingly fear supply shortages, resulting in higher prices and changes in the curve. 

Early Market Call - as of 9:00 AM EDT

WTI - Dec  $55.89, up 75 cents

RBOB - Dec $1.7236, up 1 cent

HO -Dec $1.9179, up 1.58 cents

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Latest Post November 17, 2017

December NYMEX Natural Gas Futures Contracts Closed at $3.053 on Thursday, November 16th

Thursday, November 16th saw the front-month NYMEX Natural Gas Futures Contracts open at $3.102, two cents above Wednesday’s closing price of $3.080.  Setting the pace early on with a steady decline near $3.085 ahead of 10:30AM, a larger-than-expected withdrawal from storage briefly directed prices to the intraday high of $3.110 before continuing its downward route.  Finding support at the intraday low of $3.049 near midday, December straddled the $3.06 mark for the duration of the afternoon to close lower on Thursday at $3.053.

The EIA Natural Gas Storage Report published on Thursday showed an 18 BCF withdrawal from storage for the week ended November 10th – slightly larger than the market estimate of 15 BCF.  Total working gas in storage was reported as 3,772 BCF; 6.7% below this time last year and 2.6% below the five-year average.

This morning in Globex, WTI Crude was up 78 cents; Natural Gas was up three cents; Heating Oil was up two cents; and, Gasoline was up one cent.

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