Refined Products Market Intel

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Latest Post June 28, 2017

Oil futures rose on an expected bullish EIA inventory report

Recap:  Oil futures rose on Tuesday, as traders covered shorts ahead of what is expected to be a bullish inventory report by the EIA. Mixed estimates are calling for a draw of between 2.6 and 3.25 million barrels in U.S. crude oil inventories. This, combined with sentiment that this market may have found a near-term bottom pushed August Brent above $47 a barrel and August WTI above $44 a barrel. Gains were pared, with Brent settling at $46.67 a barrel, up 84 cents, or 1.8% and WTI gaining 89 cents, or 2.1%, to settle at $44.27 a barrel.

July gasoline added 2.1 cents, or 1.5%, to $1.460 a gallon and July heating oil rose 3.4 cents, or 2.4%, to $1.414 a gallon.

Fundamental News:  Bloomberg reported that crude stocks held in Cushing, Oklahoma fell by 700,000 barrels to 60.4 million barrels in the week ending June 23rd. 

OPEC delegates stated that OPEC will not rush into making a further cut in oil output or end some countries’ exemptions to output limits.  An OPEC delegate said a larger cut could be an option, adding that further steps could be to place limits on further growth in Nigerian and Libyan output, rather than requiring them to cut back their supply.  Another source stated that removing more crude from the market was an option but said it was not being actively considered. 

Libya’s oil production increased to 935,000 bpd, up from 885,000 bpd last week.  The country is targeting a production level of 1 million bpd by the end of July.  A source stated that Libya’s NOC is repairing several pipelines that connect fields and the Es Sider and Zueitina export terminals. 

Russneft’s Chief Executive Officer, Yevgeny Tolochyok, said it will cut its oil output by about 200,000 tons this year under Russia’s deal with OPEC.  Mikhail Gutseriyev, a co-owner of Russneft, said the company would be able to restore its oil production very quickly after the OPEC and non-OPEC output cut agreement ends. 

Russia’s Rosneft said its servers had been hit by a large-scale cyber-attack but added that its oil production was unaffected. 

The head of Vitol, Ian Taylor, said Brent prices will remain in a range of $40-$55/barrel for the next few quarters. 

US Energy Secretary, Rick Perry, said the US has a unique opportunity to develop a North American energy strategy with Canada and Mexico.  

Based on US Customs data compiled by Bloomberg, the US imported 595,800 bpd of gasoline and gasoline blendstock, excluding naphtha and natural gasoline in the week ending June 22nd.  This is compared with 909,000 bpd in the previous week.   

IHS data reported that crude and refined product shipments from the US Gulf fell to 3.82 million metric tons on 92 ships in the week ending June 22nd.  It is down 12% from the previous week’s 4.32 million metric tons on 102 ships. 

According to Bloomberg, preliminary US waterborne crude imports increased by 102,000 barrels to 4.5 million bpd in the week ending June 22nd.  West Coast imports fell by 75,300 bpd to 757,700 bpd while East Coast and Gulf Coast imports increased by 136,000 bpd and 41,100 bpd, respectively.  Total crude and product imports increased by 8,600 bpd to 6 million bpd.   

Early Market Call - as of 9:00 AM EDT

WTI - Aug $44.11, down 12 cents

RBOB - July $1.4518, down 83 points

HO - July $1.4111, down 27 points

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