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Market Intel Archives

Oil futures fell after reaching their highest level in six weeks

July 21, 2017

Recap: Oil futures fell on Thursday after reaching their highest level in six weeks. Trading was choppy as traders grappled with a global supply glut amidst concern about next week’s meeting between top producers from inside and outside of OPEC. Despite trading above $50 a barrel for the first time since June 7, Brent slipped, settling at $49.30 a barrel, down 40 cents, or 0.8%. The expiring August WTI fell 33 cents, or 0.7%, to settle at $46.79 a barrel.

The last EIA report showed sharp declines in both gasoline and distillates inventories.  However, the data wasn't free of bearish news.  With production at a 2-year high of 9.4 million barrels per day, we could see supplies ramp up rather quickly once summer demand wanes. Also, gasoline supplied to the market, a representation of demand, fell by 194k barrels per day over the week to 9.6M bpd. Gasoline stocks held on the East Coast currently sit at 64,800, higher than the 61,819 5-year average.  

Fundamental News:  The EIA reported that Saudi Arabia’s shipments of crude to the US fell to a seven year low last week, a trend likely to continue through the summer amid OPEC’s output cuts and the country’s seasonal increase in domestic consumption.  The US imported 524,000 bpd of Saudi crude in the seven days ending July 14th, just 36,000 barrels above a record low set in June 2010.

Colonial Pipeline Co said Line 1 is currently down for repair work.  It is projected to restart late Thursday or early Friday morning.  It said that based on current nomination levels, it expects to remain on its normal, 5-day schedule. 

Kinder Morgan Canada Ltd’s Trans Mountain pipeline expansion will undergo some maintenance this year, which is expected to begin in September.  Most of the work on the expansion this year will be in preparation for major construction in 2018.  It expects the Trans Mountain Pipeline expansion, which is expected to triple the pipeline’s capacity, to be in service by the end of 2019. 

Nigerian exports of Bonny Light and Forcados crude are each expected to fall in September from the previous month.  Bonny Light loadings are scheduled at just 129,000 bpd on five cargoes, down from a planned 226,000 bpd on seven cargoes in August.  Forcados exports are expected to fall to 249,000 bpd, down from 284,000 bpd in August. 

Gasoline stocks held in independent storage at the Amsterdam-Rotterdam-Antwerp terminal in the week ending July 20th increased by 1.38% on the week but fell by 40.32% on the year to 808,000 tons.  Gasoil stocks fell by 2.95% on the week and by 16.27% on the year to 2.831 million tons while fuel oil stocks increased by 31.76% on the week and by 26.84% on the year to 1.087 million tons. 

Iraq’s Oil Minister, Jabbar Al-Luiabi, said the country is proceeding with plans to increase its production to 5 million bpd by the end of the year, including the Kurdistan region.

Pemex said Tesoro Corp could begin transporting gasoline and diesel through the pipeline network owned by Pemex in September.  On Tuesday, Tesoro signed three year contracts with Pemex to use surplus capacity on Pemex pipelines and storage facilities in the northern border of Baja California and Sonora. 

Mexico’s oil regulator, the National Hydrocarbons Commission, set January 31st as the date for the next round of auctions for deep-water oil and gas tenders in the Gulf of Mexico. 

One of the two force majeure on Congo’s flagship export grade Djeno has been lifted.  There were two force majeures issued, one due to the strike was lifted while the other is still in place. 


Early Market Call - as of 9:00 AM EDT

WTI - Aug  $46.56, down 36 cents

RBOB - Aug $1.5799, down 2.63 cents

HO -Aug $1.5278, down 1.59 cents


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Oil prices jumped after release of EIA inventory report

July 20, 2017

Recap:  Oil futures were trading close to unchanged just prior to the release of the EIA report, which showed a drop of 4.7 million barrels in U.S. crude oil inventories. Upon the release, August WTI jumped 55 cents, or 1.8%, reaching a high of $47.19. U.S. production, which hit a 2 year high of 9.4 million barrels per day, shed a bearish hue over the market, pushing this spot contract back to its pre-release level of $46.64. With stockpiles decreasing across the board, bears could not hold ground, giving way to a pre-settlement rally, with oil futures settling at their highest level in 6 weeks. August WTI, which expires on Thursday, settled at $47.12 a barrel, up 72 cents, or 1.6%, while September Brent tacked on 86 cents, or 1.8%, to settle at $49.70 a barrel.   

August RBOB gained 3.8 cents, or 2.4%, to $1.617 a gallon, while August heating oil finished up 4.1 cents, or 2.7%, to $1.551 a gallon. Prices for both petroleum products saw their highest settlements since late May.

Fundamental News Saudi Arabia has been reducing its domestic stocks of crude in a sign that the global market is rebalancing.  Saudi Arabia’s domestic crude stocks fell in 16 of the 19 months between November 2015 and May 2017.  Domestic stocks fell to 259 million barrels at the end of May 2017, which was the lowest level since January 2012.  Stocks were down 30 million barrels on the year and down 71 million barrels from a peak in October 2015.  The persistent draw in domestic stocks likely explains why Saudi officials sound confident when they say the global oil market is rebalancing.  However, as excess producer stocks are exhausted, the supply situation will feel tighter in the second half of 2017 and into 2018, other things being equal.

A Russian energy source said Russia is ready to continue working with OPEC to help rebalance oil markets.  The source added that Russia welcomed a flexible approach by OPEC’s leader, Saudi Arabia, to accommodate rising output from Nigeria and Libya.  On Tuesday, a Saudi Arabian industry source stated that Saudi Arabia hoped to accommodate the increase in production from Libya and Nigeria through supply adjustments elsewhere but emphasized a need to work together with other producers. 

The head of Libya’s National Oil Corp, Mustafa Sanalla, said the country is aiming to produce 1.25 million bpd by the end of the year and 1.5 million bpd by the end of 2018.  Libya hopes to reach an output level of 2.1 million bpd in four or five years.  Meanwhile, production at Waha Oil Co increased to 145,000 bpd from about 100,000 bpd last week.  A company official said output could increase to 150,000 bpd in the coming days if capacity at El Sider export terminal allows. 

The IEA’s head of Oil Markets and Industry division, Neil Atkinson, said oil stocks are expected to fall in the second half of the year and support prices. 

Plains All American Pipeline is proceeding with its expansion plans for its Delaware Basin-to-Cushing, Oklahoma, crude pipeline system after receiving sufficient shipper commitments.  The project will be operational by early to mid-2019. 

Crude oil inventories in the Amsterdam-Rotterdam-Antwerp region fell by 4.57 million barrels to 59.85 million barrels in the week ending July 14th. 

ABN Amro cut its fourth quarter WTI forecast on higher US supply.  It forecast the price of WTI at $56/barrel, compared with a previous estimate of $60/barrel while the price of Brent is forecast at $59/barrel, compared with a previous estimate of $63/barrel. 

IIR reported that US refiners are expected to shut in 101,000 bpd of capacity in the week ending July 21st, increasing available refining capacity by 54,000 bpd from the previous week.  IIR expects offline capacity to fall to 99,000 bpd in the week ending July 28th. 
 

Early Market Call - as of 9:00 AM EDT

WTI - Aug  $47.44. up 30 cents

RBOB - Aug $1.6295, up 1.24 cents

HO -Aug $1.5701, up 1.82 cents


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Oil prices rose on Tuesday in response to potential export cuts from Saudi Arabia

July 19, 2017

Recap: Oil prices edged higher on Tuesday, regaining Monday’s losses, after the Financial Times reported that Saudi Arabia is considering a 1 million barrel a day cut in exports. The thought of export cuts on top of output cuts put traders back into buying mode. After reaching a low of $45.81, August WTI rose to just below $47 a barrel, breaching yesterday’s high, and creating an outside trading session, as Tuesday’s high and low extended beyond that of Monday’s. Gains were pared, with this spot contract settling at $46.40 a barrel, up 38 cents, or 0.83%. Brent for September delivery tacked on 42 cents, or 0.87%, to settle at $48.84 a barrel.

August RBOB settled up 2.2 cents, or 1.4%, to $1.579 a gallon, while August heating oil  rose 1.1 cents, or 0.7%, to $1.510 a gallon.

Fundamental News: Bloomberg reported that crude stocks held in Cushing, Oklahoma fell by 1.5 million barrels to 56.06 million barrels in the week ending July 14th.

Saudi Arabia is said to be considering a further 1 million bpd export cut in order to offset the rise in Libyan and Nigerian oil production.  Separately, a Saudi industry source stated that Saudi Arabia remains committed to work with other oil producers to try and address recent changes in global supply, including the rise in output from Nigeria and Libya.  It wants to make sure that the oil market is well balanced. 

Kuwait’s Oil Minister, Ali Khalifa Al Sabah, said it is too early to deepen OPEC-led oil cuts or cap Nigeria’s and Libya’s output.  He also stated that there is no need for an extraordinary meeting before November.

Two OPEC sources stated that OPEC’s Board of Governors has picked Saudi Arabia’s candidate, Ayed al-Qahtani, to be the oil exporter group’s new head of research.  Sources also stated that OPEC Governors are meeting at the group’s Vienna headquarters on Tuesday. 

The head of Libya’s National Oil Corp, Mustafa Sanalla, said he would lead a Libyan delegation to a meeting of OPEC and non-OPEC oil producers in St. Petersburg, Russia on July 22nd to share his country’s production plans.  He said Libya’s political, humanitarian and economic problems must be considered in any discussion about limiting the country’s output.  Libya’s oil production is at just over 1 million bpd.     

Ecuador, an OPEC member, will no longer comply with an agreed OPEC production cut agreement and plans to gradually raise its oil outputdue to the country’s financial difficulties.  Ecuador’s Oil Minister, Carlos Perez, said that Ecuador’s compliance with the agreed cuts was only about 60%, putting current output at 545,000 bpd.  He said the country will not be able to meet its commitment to lower its output by 26,000 bpd to 522,000 bpd. 

Aiteo Group stated that a Nigerian pipeline to the Bonny terminal has been damaged by sabotage.   

Exports of Nigeria’s Qua Iboe crude are expected to fall to 222,000 bpd in September from 245,000 bpd in August. 

Magellan Midstream announced on Sunday the restart of the 275,000 bpd Longhorn crude oil pipeline in Texas that was shut on July 13th following a leak. 

According to Bloomberg, preliminary US waterborne crude imports fell by 182,300 barrels to 4.5 million bpd in the week ending July 13th.  Total crude and product imports increased by 481,900 barrels to 6.2 million bpd.

Early Market Call - as of 9:00 AM EDT

WTI - Aug $46.39, down 1 cent

RBOB - Aug $1.5966, up 1.77 cents

HO - Aug $1.5175, up 69 points


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Oil futures closed lower on Monday after climbing for six sessions straight

July 18, 2017

Recap:  After climbing for six straight sessions, oil futures reversed course on Monday after the EIA released a report calling for a rise in U.S. shale production. Overnight trading pushed prices to their highest level in 8 sessions, but the thought of higher U.S. production scared off week longs. After peaking the session at $46.88 a barrel, August WTI slipped below $46 a barrel before settling at $46.02, down 52 cents, or 1.12%. September Brent fell 49 cents, or 1%, to settle at $48.42 a barrel.

August RBOB shed less than half penny, or 0.2%, to $1.557 a gallon, while August heating oil ended at $1.50 a gallon, down 1.6 cents, or 1%.

Fundamental News:  OPEC’s secondary data shows that the 11 members bound by the group’s output cut agreement produced 29.89 million bpd in June compared with 29.69 million bpd in May.  Compliance with the cuts for those 11 members fell to 92% in June from 110% in May. 

Russia’s Energy Ministry reported that the country produced about 10.96 million bpd on average in the first two weeks of July.  Russia pledged to cut its production to 10.947 million bpd under the agreement signed with OPEC. 

Libya’s oil production currently stands at 1.032 million bpd, relatively unchanged from its level reported at the end of last month.  Libya’s output increased over 1 million bpd in late June and has been fluctuating at up to 1.05 million bpd since then.  Output at Waha Oil Co increased to 100,000 bpd from about 85,000 bpd last week after a power station came back online. 

Angola’s exports are expected to fall to 50 cargoes in September, down from 54 cargoes in August. 

A JPMorgan analyst said producers in the US are hedging again as the curve strengthens.  He said the recent recovery in calendar 2018 WTI close to $50/barrel appears to have been met with renewed hedging activity by producers.  He said the tightening of the curve structure is a likely sign of renewed hedging by some producers.  

Merrill Lynch said US imports of Saudi crude, usually medium or heavy grades, fell substantially over the past five months as Saudi Arabia cut production of those grades compared with lighter oil. 

Gasoline exports from northwest Europe to North America have increased over the past week to over 500,000 tons from about 400,000 tons during the previous week. 

Goldman Sachs reported that US oil production may increase by 840,000 bpd from the fourth quarter of 2016 to the fourth quarter of 2017.  They expect the increase to come from the Permian, Eagle Ford, Bakken and Niobrara shale plays.  It is up from the 835,000 bpd gain estimated in the previous week. 

The US Energy Department stated that US shale oil production is forecast to increase for the eighth consecutive month, increasing 112,000 bpd to 5.585 million bpd in August.  The Permian Basin of Texas and New Mexico is expected to produce 2.535 million bpd, up 64,000 bpd from July.  In Texas’ Eagle Ford, oil production is forecast to increase by 27,000 bpd to 1.387 million bpd.  Meanwhile, in North Dakota’s Bakken, oil output is expected to increase by 3,500 bpd to 1.043 million bpd, the most since November.

Early Market Call - as of 9:00 AM EDT

WTI - Aug  $46.66, up 64 cents

RBOB - Aug $1.5840, up 2.73 cents

HO -Aug $1.5218, up 2.20 cents

View the Sprague Refined Products Market Watch Report in a downloadable pdf forma.

Oil futures continued to rise after reports of supply disruptions in Nigeria

July 17, 2017

Recap:  Oil futures rose for the fifth consecutive session, driven by weakness in the dollar and reports of supply disruptions in Nigeria. Brent rose as much as 64 cents, or 1.3% to a high of $49.06 a barrel, while WTI gained 66 cents, or 1.4%, reaching a high of $46.74 a barrel. Gains were slightly pared, with September Brent finishing the session at $48.91, up 49 cents, or 1.01%, or 4.7% on the week, while August WTI tacked on 46 cents, or 1.00%, to settle at $46.54, up 5.2% on the week. 

August RBOB rose 3.4 cents, or 2.3%, to $1.561 a gallon, settling about 4.1% higher for the week, while August heating oil added 2.3 cents, or 1.6%, to $1.515 a gallon, for a weekly rise of about 4.6%.

Fundamental News Baker Hughes reported that US energy firms added oil rigs for a second consecutive week as the drilling recovery continues into a 14th month.  Energy companies searching for oil added two oil rigs in the week ending July 14th, bringing the total count up to 765, the most since April 2015. 

The Shell Petroleum Development Co of Nigeria declared force majeure on Bonny Light crude oil exports on Thursday.  The declaration followed the shutdown by operator, Aiteo, of the Nembe Creek Trunk Line, one of two pipelines that export the crude grade.  Exports of Bonny Light crude was set at 164,000 bpd in July and 226,000 bpd in August.

Kuwait’s OPEC Governor, Haitham Al-Ghais, said it would premature to cap Nigerian and Libyan oil production as the two countries’ output needs to stabilize further.  He said the market is on a recovery track due to rising global demand.  He stated that output had increased on average by between 300,000 and 500,000 bpd from the two countries combined since the start of the supply-cutting agreement in January 2017.  He said representatives from Libya and Nigeria had been invited to a technical OPEC/non-OPEC committee meeting on July 22nd ahead of a ministerial gathering to give presentations on production from both countries. 

Russia’s Finance Minister, Anton Siluanov, said the price of oil will fluctuate between $40 and $60/barrel in the short term, most likely staying in the lower half of the range.   

The former Oil Minister of Qatar, Abdullah al-Attiyah, said OPEC would hurt itself and help US shale producers if it made deeper output cuts.  He said if OPEC deepened its cut, prices would rise and shale oil producers and others would take OPEC’s market share. 

OPEC’s efforts to cut the oversupply is not only being hindered by shale oil drillers but also by oil sands companies, including Devon Energy, Suncor Energy and Cenovus Energy, who have also increased their operations.  Their thermal production sites are running as much as 30% above capacity this year.  IHS Energy stated that oil sands will be second to shale as the largest contributor to global supply growth over the next two years with 500,000 bpd of production scheduled to enter the market. 

IIR reported that US oil refiners are expected to shut in 155,000 bpd of capacity in the week ending July 14th, increasing available refining capacity by 15,000 bpd from the previous week.  IIR expects offline capacity to fall to 73,000 bpd in the week ending July 21st before rising to 91,000 bpd in the following week. 


Early Market Call - as of 9:00 AM EDT

WTI - Aug  $46.40, down 15 cents

RBOB - Aug $1.5620, up 15 points

HO - Aug $1.5105, down 42 points


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Increase in OPEC's June production pushed oil prices lower

July 14, 2017

Recap:  Reports of an increase in OPEC’s June production pushed oil futures lower in overnight trading, with August WTI touching just below $45 a barrel. However, the down move was reversed after the IEA reported strong Chinese demand. September Brent rose to a high of $48.53, while August WTI hit $46.28. Gains were pared in both blends, with August WTI settling at $46.08 a barrel, up 59 cents or 1.30%, while September Brent tacked on 68 cents, or 1.42%, to settle at $48.42 a barrel. Thursday was the fourth straight day of gains.

August RBOB finished up half a penny, or 0.4%, to $1.526 a gallon, while August heating oil rose 1.8 cents, or 1.2%, to $1.492 a gallon.

Fundamental News Genscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending Tuesday, July 11th fell by 473,281 barrels on the week but increased by 323,514 barrels from Friday, July 7th to 60,554,726 barrels.

The IEA stated that the rebalancing of global oil markets has become less certain, with OPEC production rising and little evidence that stocks are declining as expected.  The IEA reported in its monthly report that OPEC’s compliance with production cuts fell in June to its lowest levels in six months as several members produced more oil than allowed by their output cut agreement.  OPEC’s compliance with cuts fell to 78% last month from 95% in May as higher output from Algeria, Ecuador, Gabon, Iraq, the UAE and Venezuela offset strong compliance from Saudi Arabia, Kuwait, Qatar and Angola.  The IEA stated that Nigeria and Libya, which were exempt from the production cut agreement, increased their combined production by more than 700,000 bpd in recent months.  OPEC’s crude output increased by 340,000 bpd in June to 32.6 million bpd, the highest level in 2017.  The call on OPEC crude is expected to increase steadily in 2017 and reach 33.6 million bpd in the fourth quarter.  Global oil demand growth saw a large acceleration in the second quarter.  Total oil demand was 97.44 million bpd in the second quarter and supply was 96.77 million bpd.  The IEA revised its 2017 growth forecast by 100,000 bpd to 1.4 million bpd.  It reported that global oil stocks fell in May to 266 million barrels above the 5 year average, down from 300 million barrels in April. 

The IEA’s Chief Economist, Laszlo Varro, said that oil demand was doing reasonably well but that the market was still oversupplied.  

The EIA reported that US oil imports from Saudi Arabia are running at the slowest rate since 2015.  US crude imports from Saudi Arabia averaged less than 900,000 bpd in the four weeks ending July 7th.  Imports from Saudi Arabia will fall even further to less than 800,000 bpd in August. 

Libya’s crude production increased to 1.05 million bpd on Wednesday from 1.005 million bpd at the beginning of July. 

Goldman Sachs lowered its Brent crude price forecast to $52.04/barrel from a previous estimate of $55.39/barrel for 2017.  It also cut its WTI price forecast for 2017 to $49.70/barrel from a previous forecast of $52.92/barrel.  Goldman Sachs forecast the price of Brent and WTI at $58/barrel and $55/barrel, respectively for 2018. 

Gasoline stocks held in independent storage in the Amsterdam-Rotterdam-Antwerp terminal in the week ending July 13th fell by 3.16% on the week and by 33.8% on the year to 797,000 tons.  Gasoil stocks increased by 0.55% on the week but fell by 16.25% on the year to 2.917 million tons while its fuel oil stocks fell by 13.61% on the week and by 11.76% on the year to 825,000 tons. 


Early Market Call - as of 9:00 AM EDT

WTI - Aug  $46.15, up 8 cents

RBOB - Aug $1.5346, up 84 points

HO -Aug $1.4981, up 66 points


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Oil prices fell from session highs after rise in U.S. oil production

July 13, 2017

Recap:  A rise in U.S. oil production offset the 7.6 million barrel draw in U.S. oil stocks, taking the wind out of earlier gains in oil futures. Prices notched out new lows after falling from session highs, with August WTI stopping just above $45 a barrel, while at the same time, failing to penetrate support at $44.95. WTI settled at $45.49 a barrel, up 45 cents, or 1%. September Brent tacked on 22 cents, or 0.46%, to settle at $47.74 a barrel.

August RBOB rose less than half a cent to $1.521 a gallon, while August heating oil shed half a penny to $1.474 a gallon. 

Fundamental News:  The EIA reported that crude stocks fell by 7.564 million barrels in the week ending July 7th.  It was the largest one-week drawdown since September 2016.  Crude oil stocks held in Cushing, Oklahoma fell by 1.948 million barrels to 57.6 million barrels, the smallest level since November 2015.  US crude production increased to 9.4 million bpd, up 59,000 bpd on the week.  US crude exports increased to 918,000 bpd in the week ending July 7th, compared with 768,000 bpd in the previous week.

In its monthly report, OPEC stated that world demand for its oil will decline next year as US shale producers and other producers produce more, suggesting the oil market will see a surplus in 2018 despite the OPEC-led output cut.  It forecast demand of its oil next year at 32.2 million bpd, down 60,000 bpd on the year.    OPEC also reported that its output increased by 393,000 bpd in June to 32.611 million bpd, with output increases from Nigeria, Libya, Saudi Arabia and Iraq.  OPEC’s Secretary General, Mohammad Barkindo, said compliance remains high with the output cut agreement and added that OPEC remains optimistic to helping the market to rebalance itself.

A Saudi industry source said Saudi Arabia planned to reduce shipments in August by more than 600,000 bpd, taking exports for the month to the lowest level this year. 

Algeria’s Energy Minister, Mustapha Guitouni, said a joint meeting between OPEC and non-OPEC countries in Russia later this month will only discuss the oil market but will make no decisions. 

Iran’s Deputy Oil Minister, Amir Hossein Zamaninia, said the country’s oil output is expected to increase to about 4 million bpd by the end of the year.  Iran has been producing about 3.8 million bpd in recent months. 

Libya’s oil production is expected to increase to 1.05 million bpd, up from 1.012 million bpd. 

Nigeria’s Oil Minister, Emmanuel Ibe Kachikwu, said the country has no set timeframe to join OPEC oil production cuts.  Nigeria is currently producing 1.7 million bpd of oil. 

BP’s chief executive, Bob Dudley, said global oil markets are currently in balance and should tighten during the second half of the year as OPEC-led cuts help cut stock levels. 

China is expected to increase its oil and natural gas pipelines during the coming years as the country moves to secure stable supplies and cut its reliance on coal.  The National Development and Reform Commission and the National Energy Administration stated that the country’s pipeline network will stretch to 169,000 kilometers by 2020, with those for crude, refined oil and natural gas at 32,000 km and 104,000 km, respectively.  The total length of the networks will increase to 240,000 km by 2025.  The oil and gas pipeline networks ensure steady energy flows from foreign sources to the country and from remote border areas to prosperous inland cities.

IIR reported that US oil refiners are expected to shut in 111,000 bpd of capacity in the week ending July 14th, increasing available refining capacity by 59,000 bpd from the previous week.  IIR expects offline capacity to fall to 29,000 bpd in the week ending July 21st. 
 

Early Market Call - as of 9:00 AM EDT

WTI - Aug  $45.68, up 19 cents

RBOB - Aug $1.5250, up 40 points

HO - Aug $1.4764, up 28 points
 

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Oil prices rose higher after decreases in European product stockpiles

July 12, 2017

Recap:  Oil prices, along with heating oil and gasoline futures, rose during Tuesday’s trading session, pulled higher by decreases in European product stockpiles despite an increase in refinery runs. Both WTI and Brent rose by as much as 2 percent before trimming gains. August WTI settled at $45.04 a barrel, up 64 cents, or 1.44%, while Brent for September delivery tacked on equally as much, to settle at $47.52. A late session reaction to the API numbers pushed oil to new highs, with both WTI Brent hitting new highs.

News of the drawdown in European product stockpiles pushed the 3-2-1 crack spread to its highest level since May. The August crack gained 24 cents, or 1.2%, to settle at $18.82. 

August RBOB rose 1.8 cents, or 1.2%, to $1.518 a gallon, while August heating oil climbed 2.3 cents, or 1.6%, to $1.476 a gallon.

Fundamental News Bloomberg reported that crude oil stocks held in Cushing, Oklahoma fell by 1.4 million barrels to 58.1 million barrels in the week ending July 7th.  Separately, Genscape reported that crude oil stocks held in Cushing, Oklahoma fell by 2,108,239 barrels on the week and by 796,795 barrels from Tuesday, July 4th to 60,231,212 barrels.

OPEC’s Secretary General, Mohammed Barkindo, said all global oil producers should help balance the market, when asked what else OPEC could do to ease the oversupply. 

Saudi Arabia has told OPEC that it raised crude oil production to 10.07 million bpd in June, up from 9.88 million bpd in May.  The increase takes Saudi Arabia slightly above its OPEC production target of 10.058 million bpd for the first time since it brokered the output cut deal. 

Saudi Aramco will meet customers’ full crude oil requirement in India and southeast Asia in August.  This shows how Saudi Arabia aims to retain its market share in Asia.  Saudi Arabia has been cutting exports to Europe and the US to comply with a production cut agreement by OPEC and some non-OPEC producers. 

Iran’s Deputy Minister of Petroleum for Trade and International Affairs, Amir Hossein Zamania, said the country is currently producing 3.8 million bpd of oil.  Iran produced 3.76 million bpd in June. 

The IEA stated in its World Energy Investment report that following a 44% decline between 2014 and 2016, upstream oil and gas investments are likely to increase 6% this year.  It said that with oil prices falling below $45/barrel in mid-June, there is a real possibility companies may not be willing to fully implement these investment plans. 

The EIA in its Short Term Energy Outlook stated that it cut its 2017 world oil demand growth forecast by 70,000 bpd to 1.47 million bpd and its 2018 estimate by 10,000 bpd to 1.61 million bpd.  It forecast total petroleum demand in 2017 at 98.39 million bpd while demand in 2018 is estimated at 100 million bpd.  OPEC’s oil production in 2017 is estimated to fall by 160,000 bpd to 32.53 million bpd but increase by 470,000 bpd to 33 million bpd.  Total US oil demand in 2017 is estimated to increase by 310,000 bpd to 19.94 million bpd and increase by 360,000 bpd to 20.3 million bpd in 2018.  US oil production is expected to increase by 460,000 bpd to 9.33 million bpd in 2017 and by 570,000 bpd to 9.9 million bpd in 2018.  In terms of prices, the EIA forecast the price of Brent crude at $51/barrel in 2017 and $52/barrel in 2018, down $2/barrel and $5/barrel from its previous forecast, respectively.  The average WTI crude prices are forecast to be $2/barrel lower than the Brent price in both 2017 and 2018. 


Early Market Call - as of 9:00 AM EDT

WTI - Aug $45.99, up 94 cents

RBOB - July $1.5373, up 1.91 cents

HO - July $1.4940, up 1.78 cents


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Oil prices settled higher after traders geared up for upcoming OPEC meeting

July 11, 2017

Recap: Last week’s losses were extended in early morning trading, as oil futures fell to their lowest level in over a week. The sell-off, however, was unsustainable as traders geared up for OPEC’s upcoming July 24th meeting set to be held in Russia. It is highly anticipated that exemptions from supply cuts will be lifted from Nigeria and Libya, as both countries have been ramping up output. Prices climbed to new session highs before paring gains. September Brent settled at $46.88 a barrel, up 17 cents, while August WTI finished at $44.40 a barrel, also gaining 17 cents.

Products also inched higher, with August RBOB  rising under half a cent to a settlement of $1.501 a gallon, while August heating oil added just over a half penny to settle at $1.454 a gallon.

Fundamental News Russia’s Energy Minister, Alexander Novak, said Libya and Nigeria may attend a joint meeting between OPEC and non-OPEC this month.  Meanwhile, Kuwait’s Oil Minister, Issam Almarzooq, said Libya and Nigeria may be asked to cap their crude output soon in an effort to rebalance the market.  Both nations have increased their output since they were exempt from the OPEC-led output cut agreement.  Six ministers from OPEC and non-OPEC countries, including Kuwait, Venezuela, Algeria, Saudi Arabia, Russia and Oman will meet on July 24th in St. Petersburg, Russia, to discuss the current situation in the oil market.  The group called the Joint Ministerial Monitoring Committee, could recommend expanding the pact to the wider group.  Nigeria’s Oil Minister, Emmanuel Ibe Kachikwu, said Nigeria was not opposed in principle to joining OPEC’s production cuts, but would have to wait and see if production returned to acceptable levels.  The head of Libya’s National Oil Corp did not indicate any willingness to cap output yet, saying Libya’s humanitarian problems must be considered in any talks on the subject.

Separately, Russia’s Energy Minister, Alexander Novak, said he is scheduled to meet with Qatar’s Energy Minister, Mohammed al-Sada, later on Monday.

Meanwhile, Kremlin Spokesman, Dmitry Peskov, said there are no new agreements on the global oil output cut between OPEC and non-OPEC producers.  Last week, Russia’s President, Vladimir Putin, said that Russia planned to keep cooperating with other countries to harmonize global energy markets and reduce price volatility. 

Saudi Aramco’s chief executive, Amin Nasser, said the world may be heading for an oil supply shortage following a steep decline in investments and a lack of new conventional discoveries.  He said unconventional shale oil and alternative energy resources are an important factor to help meet future demand but it is premature to assume that they can be developed quickly to replace oil and gas. 

Iran’s leading oil tanker operator, NITC, said its shipments to Europe were increasing daily and the company plans to upgrade its fleet to support expansion. 

An Iranian energy official said the country is preparing for its first round of oil and gas exploration tenders since the easing of economic sanctions, and is hoping to attract companies such as BP and Gazprom.  Iran has already been working on deals to develop existing fields such as South Pars, South Azadegan, Yadavaran, West Karoon, Mansuri and Abe-Timur.  NIOC is planning to tender 14 oil and gas blocks for exploration in the next two to three months. 

IIR reported that US oil refiners are expected to shut in 111,000 bpd of capacity in the week ending July 14th, increasing available refining capacity by 59,000 bpd from the previous week.  IIR expects offline capacity to fall to 29,000 bpd in the week ending July 21st. 


Early Market Call - as of 9:00 AM EDT

WTI - Aug  $44.25, down 15 cents

RBOB - Aug $1.4900, down 1.05 cents

HO -Aug $1.4465, down 70 points


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Oil futures fell 4%, impacted by global oversupplies and U.S. active rig count

July 10, 2017

Recap: The tug-of-war between bulls and bears picked up speed on Friday, with bears gaining ground. Oil futures fell as much as 4% on signs that OPEC/non-OPEC production cuts have had little impact on global oversupplies, and as the U.S. oil rig count rebounded after falling last week. Baker Hughes reported the U.S. active rig count rose by 7 to a total of 763. Despite last week’s drawdown in U.S. inventories, investors are focusing on the increase in U.S. production. According to the Energy Information Administration, production rose by 88,000 barrels per day, or 0.95% to 9,338,000 barrels per day, or up 10.8% year-to-date.

Exchange traded futures fell to their lowest level in just over a week, with WTI dipping back below $43 a barrel and Brent falling below $47 a barrel. Losses were trimmed ahead of the weekend, with August WTI settling at $44.23 a barrel, down $1.29, or 2.83%. Brent for September delivery slipped $1.40, or 2.91%, to settle at $46.71 a barrel.

Fundamental News Baker Hughes reported that US energy firms added oil rigs for the 24th week in the past 25 weeks.  The number of rigs searching for oil in the week ending July 7th increased by 7 to a total of 763, the most since April 2015. 

According to S&P Global Platts, OPEC’s crude oil production increased 500,000 bpd in the last two months, as the continued recoveries of Nigeria and Libya pushed the group’s output to 32.49 million bpd. 

Saudi Arabia’s Energy Minister, Khalid Al-Falih, has repeatedly promised to do what’s necessary to eliminate the global oversupply.  While the country is still cutting slightly deeper than required, it increased production in June to the highest level since the agreement began, increasing exports by even more, and this week cut prices for Asian buyers.  Given the current state of the oil market, that may not be enough. 

A spokesman for Russia’s Energy Ministry stated that Russia is ready to consider proposals from its partners, including on revising parameters of the agreement, if needed.  Separately, Russia’s President, Vladimir Putin, said that Russia planned to keep cooperating with other countries to harmonize global energy markets and reduce price volatility.  Speaking at an informal meeting of BRICS nations in Hamburg where the Group of 20 summit is underway, Russia’s President said that the country viewed the Paris climate change agreement as a basis for long-term cooperation.   

A senior energy economist at ABN Amro, Hans van Cleef, said the push and pull between bullish and bearish factors will keep volatility high. 

Morgan Stanley reported that a WTI price of $46 to $50/barrel would likely prevent US production rising in the mid- to long-term, but added that prices need to be in the low $40s for US output to fall significantly.  Morgan Stanley said it expected to see WTI prices to remain below $50/barrel until mid-2018.

Bank of China International cut its third quarter WTI price forecast to $48/barrel and its fourth quarter price estimate to $46/barrel. 

Japan’s Trade Ministry reported that the country is preparing to increase the crude storage capacity that it lends to state-owned Saudi Aramco by 1.9 million barrels or 300,000 kiloliters this summer.  Last October, Japan and Saudi Arabia agreed to raise the storage capacity in Okinawa from 1 million kl to 1.3 million kl or 8.2 million barrels by the summer.  Currently, the work is underway to have the additional storage ready at a storage facility in Uruma City in Okinawa prefecture. 
 

Early Market Call - as of 9:00 AM EDT

WTI - Aug  $43.87, down 36 cents

RBOB - Aug $1.4837, down 1.50 cents

HO -Aug $1.4384, down 98 points


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