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Market Intel Archives

Oil prices finished up on signs that OPEC members are adhering to agreed upon cuts

February 13, 2017

Recap:  Oil prices finished the week on a strong note, on signs that OPEC members are curtailing output by more than 90% of the agreed upon cuts. After reaching its lowest level in 10 weeks, March WTI rebounded 5% to settle at $53.86, up 86 cents, or 1.62%. April Brent gained $1.07, or 1.9%, to $56.70 a barrel, up 4% from its weekly low of $54.44.

The Baker Hughes report showed an increase of 8 for the number of active U.S. oil rigs which kept WTI from settling above the $54 mark, but was not enough to discount the OPEC cuts and the huge build in U.S. crude oil inventories. March WTI settled just above the downward sloping trend line that dates back to Jan 3, 2017.

After reaching a weekly high of $13.70, the March RBOB/WTI crack spread pared gains to settle at $12.90, down 4 cents from Thursday. March RBOB added 1.9 cents, or 1.2%, to $1.590 a gallon, with prices up 2.3% on the week, while March heating oil rose 2.4 cents, or 1.5%, to $1.666 a gallon, down less than 0.1% from a week ago.

Fundamental NewsThe IEA stated that global oil output in January fell as OPEC and non-OPEC producers cut supply to accelerate a market rebalancing.  It reported that oil supplies fell by about 1.5 million bpd in January, including 1 million bpd from OPEC, leading to record initial compliance of 90% with its deal to cut production.  The IEA said if the January level of compliance is maintained, the output reductions combined with strong demand growth should help ease the record stocks overhang in the next six months by about 600,000 bpd.  It also reported that after declining by 800,000 bpd last year, non-OPEC output will increase by 400,000 bpd in 2017 with combined growth from Brazil, Canada and the US amounting to as much as 750,000 bpd.  It raised estimates of global oil demand growth in 2017 by 100,000 bpd to 1.4 million bpd.

Reuters reported that OPEC has delivered over 90% of pledged oil output cuts in January.  Supply from the 11 OPEC members with production targets under the deal in January has declined to 29.921 million bpd or 92% of compliance.

Baker Hughes reported that US energy companies added oil rigs for a 14th week in the last 15.  Drillers added 8 oil rigs in the week ending February 10th, bringing the total count up to 591, the most since October 2015.  During the same week a year ago, there were 439 active oil rigs.

Oil Movements reported that OPEC shipments will decline by 0.7% to 23.95 million bpd in the four weeks ending February 25th, compared with the four week period ending January 28th.

Eni lifted the force majeure on Nigeria's Brass River crude exports which had been in place since late May.  The company official lifted the designation on January 29th.

Saudi Aramco is in talks to sell term crude supplies to China's North Huajin Chemical Industries Group.  If talks are successful, Aramco may start supplying oil to the company in the first quarter.  Initial volumes may be around 30,000 bpd.

Nigeria's Vice President, Yemi Osinbajo, visited the Delta region on Friday as the government sought to broker peace with militants.  Militant attacks on production facilities last year cut output by as much as one-third.  A peace deal could help increase production, with the government aiming to produce an average of 2.2 million bpd this year.  In January, Nigeria's production was 1.7-1.8 million bpd. 

 

Early Market Call - as of 9:00 AM EDT

WTI - Mar $53.12, down 74 cents

RBOB - Mar $1.5610, down 2.83 cents

HO - Mar $1.6285, down 3.74 cents

 

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US gasoline consumption contributed to rise in oil prices

February 10, 2017

Recap:  Wednesday's rise in oil prices continued into Thursday's session on signs that U.S. gasoline consumption is better than expected. March WTI rose to a high of $53.21 prior to slicing gains for a settlement at $53.00 a barrel, up 66 cents, or 1.26%. Brent for April delivery climbed 51 cents, or 0.93%, to settle at $55.63 a barrel.

Production cuts from within OPEC and overflowing U.S. supplies of oil are working against each other and as a result WTI remains within the trading range that dates back to the beginning of December. While the futures market remains range bound, continued cutbacks by OPEC, along with strong gasoline demand in the U.S., could push prices out of the range of $51-$56.

After bottoming at $9.91 on Tuesday, the March RBOB/WTI crack spread retraced 50% of its fall from a high of $16.91 made back in December. This spread touched $13.43 today before paring gains for a settlement of $12.94, up 7 cents from Wednesday. March RBOB settled at $1.570 a gallon, up 1.8 cents, or 1.1%, while March heating oil gained just over half a cent to $1.642 a gallon.

Fundamental NewsGenscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending February 7th increased by 1.2 million barrels to 67.2 million barrels.

Saudi Arabia's Energy Minister, Khalid al-Falih, met Venezuela's foreign and energy ministers, Delcy Rodriguez and Nelson Martinez, respectively, in Riyadh to review oil market conditions and the importance of keeping them stable. 

Iran's crude oil and condensate exports in January increased 3% on the month as it continued to regain market share.  Total estimated export volumes from Iranian ports in January increased to 2.162 million bpd from 2.102 million bpd in December.  Iran's output in January increased to 3.72 million bpd, up 30,000 bpd on the month. 

An Iraqi Oil Ministry statement said five oil wells are still burning out of 25 that Islamic State set on fire in Qayyara, south of Mosul.  North Oil Company crews are working to control the fires torched by the hardline militants to slow down the advance of US backed Iraqi forces toward Mosul. 

Goldman Sachs said oil market re-balancing will take time due to a surprise increase in US production and high fuel inventories.  It sees imports as the key driver to the large builds and as the reflection of the fourth quarter 2016 global oil market surplus of more than 500,000 bpd.  It said the global oil market surplus in the fourth quarter of 2016 led to further rises in global inventories in January and as result the draws that it expects will start from a high base and need sustained cuts to normalize and achieve backwardation, with WTI likely lagging Brent.  It said that given OPEC and other producers are complying at a high level of 85% to their proposed output cuts, the import channel will reverse from March onward.  It stated that US production increased faster than it forecast and it believes the faster shale rebound is creating downside risk to its 2018 WTI price forecast of $55/barrel. 

Euroilstock reported that European crude and oil product stocks in January totaled 1.15 billion barrels, up 1.9% on the month but down 1.5% on the year.  European crude oil stocks increased by 3.2% on the month but fell by 1.6% on the year to 481.73 million barrels while gasoline stocks increased by 3.5% on the month but fell by 1.9% on the year to 122.06 million barrels and distillate stocks increased by 1.2% on the month and by 0.2% on the year to 449.7 million barrels. 

Gasoline stocks held in the Amsterdam-Rotterdam-Antwerp hub in the week ending February 9th fell by 9.62% on the week and by 25.68% on the year to 987,000 tons while gasoil stocks fell by 3.59% on the week and by 10.48% on the year to 3.17 million tons.


Early Market Call - as of 9:00 AM EDT

WTI - Mar $54.02, up $1.02

RBOB - Mar $1.6130, up 4.25 cents

HO - Mar $1.6753, up 3.34 cents


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Decline in US gasoline inventories bolstered futures prices

February 09, 2017

Recap:  After falling to an almost three-week low on Tuesday, oil prices rebounded as unexpected decline in U.S. gasoline inventories bolstered futures prices across the board. Despite the 13.8 million barrel increase, the second largest on record, oil prices reversed early losses to finish the session with a slight gain. March WTI settled at $52.34 a barrel, up 17 cents, or 0.33%. April Brent tacked on 7 cents, or 0.13%, to settle at $55.12 a barrel.

March RBOB futures gained 6.5 cents, or 4.4%, to settle at $1.553 a gallon. March heating oil rose 1.4 cents, or 0.9%, to $1.636 a gallon. With today's rebound in gasoline futures, the March RBOB/WTI crack spread settled at $12.90, $1.49 higher on the day. With gasoline stocks in PADD 1 possibly leveling off, the unseasonable weakness that has been weighing on this spread could be coming to an end. As of now, it appears to be 2 weeks behind the seasonal ascent, so it has some catching up to do.

Fundamental News
The US Energy Department said it will sell 10 million barrels of sour crude from the SPR.  The sale was mandated by a law passed last year to increase medical research funding that calls for the sale of 25 million barrels over three years, starting with the sale of 10 million barrels this year. 

Saudi Aramco will supply full contract volumes of crude oil to two Asian buyers in March. Separately, Saudi Arabia's crude oil supplies to Japan increased to a 10 year high in 2016.  Saudi Arabia's crude supplies to Japan last year averaged 1.18 million bpd, up 4.7% on the year and accounted for about 36% of Japan's total imports of 3.31 million bpd.  Coupled with spot supplies from Saudi Aramco's leased storage in Okinawa, Japan's crude imports from Saudi Arabia increased in 2016 on the back of the country's response to incremental demand for its oil, despite no increase in term import contractual volumes.  Saudi crude supplies to Japan are expected to remain high in 2017, supported by occasional spot shipments out of state-owned Saudi Aramco's leased storage in Okinawa. 

Qatar's Energy Minister, Mohammed al-Sada, said higher oil prices may increase shale oil production but added that the global oil market can accommodate this as demand remains healthy.  He also stated that it is too early to say whether the agreement between OPEC and non-OPEC producers needs to be extended beyond six months, but stated that the market is responding positively to the deal.   

Goldman Sachs said the US gasoline surplus is driven by transient excess supply, not demand weakness.  It stated that going forward, we expect that current low forward margins, seasonally higher turnarounds and sustained demand growth will lead to gasoline inventories normalizing.  Goldman Sachs said it is keeping its strong global demand growth for gasoline unchanged. 

US Census data showed that the US exported 371.2 million liters of ethanol in December, down 19.6% or 90.5 million liters from November. 

Genscape reported that gasoil stocks in the Amsterdam-Rotterdam-Antwerp terminal in the week ending February 3rd fell by 4.9% to 6.033 million tons.  It was the first decline after six weeks of builds. 

Plains All American Pipeline said crude production in the Permian Basin could reach 3.5 million bpd by 2020 and potentially surpass that level depending on how many rigs are added.  It estimated 18-20% production growth for the Permian Basin in 2017.  Plains' forecast assumes an average US crude price of $55/barrel. 

IIR reported that US oil refiners are expected to shut in 1.415 million bpd of capacity in the week ending February 10th, reducing available refining capacity by 378,000 bpd from the previous week. 

Early Market Call - as of 9:00 AM EDT

WTI - Mar $52.98, up 64 cents 

RBOB - Mar $1.5648, up 1.15 cents 

HO - Mar $1.6522, up 1.62 cents


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Oil prices fell as U.S. shale production continues to increase

February 08, 2017

Recap: Losses in oil prices were extended on Tuesday, as prices were weighed down by strength in the dollar, rising U.S. shale production and falling RBOB prices. In post settlement trading, and after the release of the API numbers, which showed a build of 14.2 million barrels in U.S. crude oil stocks, oil futures fell 54 cents, reaching a low of $51.63 a barrel. Settlement was $52.17, down 84 cents, or 1.58%. April Brent slipped to a low of $54.63, down 1.9% in post settlement trading. This spot contract settled at $55.05, down 67 cents, or 1.2%.

Traders have turned their focus back to U.S. gasoline stocks, which are approaching record levels. Tomorrow's inventory report is expected to show an increase of 1.1 million barrels in stockpiles. The March RBOB/WTI crack spread, which has been on a steady decline since the middle of January, fell to a low of $9.97 on the day prior to trimming losses for a settlement at $11.25. March RBOB fell 4.3 cents, or 2.8%, to $1.510 a gallon and March heating oil lost 3 cents, or 1.8%, to $1.635 a gallon.

Fundamental News: Genscape reported that crude oil stocks in Cushing, Oklahoma increased by 600,000 barrels to 64.7 million barrels in the week ending February 3rd.

Iran's Oil Minister, Bijan Zanganeh, said OPEC should cut crude production a bit more in the second half of 2017.  He also stated that all OPEC members agree that oil should be $60/barrel. 

The EIA reported in its Short-Term Energy Outlook that global liquid fuels consumption is expected to increase by 1.62 million bpd to 98.09 million bpd in 2017 and by 1.46 million bpd to 99.55 million bpd in 2018.  It also reported that OPEC production is expected to increase by 530,000 bpd to 39.55 million bpd in 2017 and by 660,000 bpd to 40.21 million bpd in 2018.  US oil production is expected to increase by 100,000 bpd to 8.98 million bpd in 2017 and by 550,000 bpd to 9.53 million bpd in 2018.  Meanwhile, US oil demand is estimated to increase by 260,000 bpd to 19.84 million bpd in 2017 and by 330,000 bpd to 20.17 million bpd in 2018.  Gasoline demand is expected to remain unchanged at 9.29 million bpd in 2017 and increase by 70,000 bpd to 9.36 million bpd in 2018 while distillate demand is expected to increase by 80,000 bpd to 3.93 million bpd in 2017 and by 110,000 bpd to 4.04 million bpd in 2018. 

The Trump administration has given its final approval to the Dakota Access Pipeline, according to a court filing issued on Tuesday.  The US Army Corps of Engineers said that the department was planning to issue an outstanding easement under a river in North Dakota that was holding up construction of the oil pipeline. 

Iraq's South Oil Co. said the country's Basra oil export terminal will stop loading operations for 24 hours, starting midnight Tuesday, for work to install a new pipeline feeding the facility.  The terminal's loading capacity is estimated at around 1.8 million bpd.  

According to cFlow, S&P Global Platts trade flow software, about 710,000 metric tons of distillates loaded from the US Gulf Coast has discharged or are set to discharge in Northwest Europe and the Mediterranean basin in February. 

According to Bloomberg, preliminary US waterborne crude imports fell by 1.3 million bpd to 3.7 million bpd in the week ending February 2nd. 

IHS reported that crude and refined product shipments from the US Gulf increased to 4.18 million metric tons on 99 ships in the week ending February 2nd. 

Data from the US Census Bureau showed that US crude oil exports fell to 442,000 bpd in December compared with 597,000 bpd in November. 


Early Market Call - as of 9:00 AM EDT

WTI - Mar $51.71, down 46 cents  

RBOB - Mar $1.4852, down 21 points

HO - Mar $1.6215, down 6 points  


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Oil prices fell as the dollar strengthened and U.S. supplies rose

February 07, 2017

Recap:  Oil prices slipped amidst a strengthening dollar and rising U.S. supplies. Futures fell throughout the session, with March WTI falling as much as 1.7% on Monday, reaching a low of $52.91 before paring losses for a settlement of $53.01, down 82 cents, or 1.52%. April Brent closed at $55.72, down $1.09, or 1.92%.

The March RBOB/WTI crack spread slipped again, stopping just above Friday's low of $10.26, prior to settling at $10.41, down $1.04 from Friday's close.

March gasoline fell 4.3 cents, or 2.8%, to $1.510 a gallon and March heating oil lost 3 cents, or 1.8%, to $1.635 a gallon.

Fundamental NewsGenscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending February 3rd increased by 1,042,065 barrels on the week and by 1,099,919 barrels from Tuesday, January 31st.

According to an S&P Global Platts survey, the ten OPEC members obligated to cut output under the agreement signed late last year achieved 91% of their required cuts in January, with production falling 1.14 million bpd from October levels.  In total, OPEC's 13 members produced 32.16 million bpd in January, down 690,000 bpd from December.  Saudi Arabia produced 9.98 million bpd, below its allocation of 10.06 million bpd under the deal.  Kuwait's oil production for January was under its quota of 2.71 million bpd, coming in at 2.7 million bpd, a 130,000 bpd decline from December.  Meanwhile, Iraq produced 4.48 million bpd compared with a quota of 4.35 million bpd.  Iran, which is allowed to increase its production to 3.8 million bpd under the deal, produced 3.72 million bpd, up 30,000 bpd on the month.  Libya and Nigeria increased their production by 50,000 bpd and 210,000 bpd, respectively, as their production continues to recover from militancy-related outages.  

Russia's Energy Minister, Alexander Novak, said his Venezuelan counterpart said the global oil deal had a positive impact on the global market. 

Seaway Crude Pipeline's 400,000 bpd Legacy pipeline resumed operations on February 5th, six days after a rupture northeast of Dallas stopped shipments.   

The Dakota Access Pipeline may start operating June 1st, assuming no new obstacles prevent it.  Energy Transfer Partners will begin filling it with oil around February 15th, barring complaints or legal action to stop it.  The company is still awaiting a permit from the US Army Corps of Engineers to build the last portion of the pipeline. 

The Houston Ship Channel was closed to inbound vessels due to fog.  There were 30 vessels waiting to dock.  

Iraq's southern crude oil exports fell in January from a record high a month earlier as the country implements output cuts agreed by OPEC and other major producers to cut the global oversupply.  The country's exports fell 187,000 bpd to 3.323 million bpd in January from the previous month. 

The Iranian Students News Agency reported that Iran's oil production capacity is expected to reach 4 million bpd in March. 

Iran's Foreign Ministry spokesman, Bahram Qassemi, said the country's missile test was not a signal to Donald Trump and was aimed at defense. 

IIR reported that US oil refiners are expected to shut 1.295 million bpd of capacity in the week ending February 10th, reducing available refining capacity by 258,000 bpd from the previous week.  IIR also reported that it expects offline capacity to increase to 1.371 million bpd in the week ending February 17th. 


Early Market Call - as of 9:00 AM EDT

WTI - Mar $52.13, down 88 cents

RBOB - Mar $1.4830, down 2.69 cents

HO - Mar $1.6131, down 2.13 cents 


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Oil prices rose after U.S. imposed sanctions on Iranian individuals and entities

February 06, 2017

Recap: Oil prices rose on Friday as the dollar slipped and after the U.S. imposed sanctions on Iranian individuals and entities. Gains were posted despite the third straight weekly rise in the number of active U.S. oil rigs, which rose by 17 to 583. March WTI added 29 cents, or 0.54%, to settle at $53.83 a barrel, while April Brent tacked on 25 cents, or 0.44%, settling at $56.81 a barrel.  

March RBOB gained 2.1 cents, or 1.4%, to $1.554 a gallon, with prices about 0.1% higher on the week,  while March heating oil finished up 1.3 cents, or 0.8%, at $1.665 a gallon, with front-month prices tacking on about 1.9% for the week.

Fundamental NewsIran's Foreign Minister, Mohammad Javad Zarif, tweeted on Friday that the country was unmoved by US threats following its missile test launch and that Iran would never initiate war.  He said Iran would never use its military might against any country, except in self-defense.  On Thursday, President Trump said "nothing is off the table" in dealing with Iran following its launch of a ballistic missile.  The US Treasury Department sanctioned more than two dozen Iranian, Chinese and Emirati businesses and individuals for their alleged role in supporting Iran's ballistic missile program.  Treasury Department officials also named officers and business executives tied to Iran's elite military unit, the Islamic Revolutionary Guard Corps, for their suspected role in aiding the Lebanese militia, Hezbollah, and Tehran's defense industries.  US officials said the sanctions did not violate the nuclear agreement Iran reached with US and other world powers in 2015.  

Russia's Energy Minister, Alexander Novak, said that oil producers had cut their output as agreed under a deal with OPEC.  He said Russian companies may cut their oil production more quickly than required by its deal with OPEC.  He said 1.4 million bpd was cut from global oil output last month.   

Baker Hughes reported that US energy companies added oil rigs for the 13th week in the last 14.  It reported that drillers added 17 oil rigs in the week ending February 3rd, bringing the total count up to 583, the most since October 2015. 

Phillips 66's Chief Executive, Greg Garland, said the Dakota Access Pipeline is expected to be completed by the second quarter.  Phillips 66 has a 25% stake in the pipeline project led by Energy Transfer Partners LP.  The pipeline was originally set to start in late 2016 but has faced intense protests and legal challenges from climate activists and Native Americans, led by the Standing Rock Sioux Tribe, whose land in North Dakota runs adjacent to the route.  On Wednesday, the US Army said it had taken initial steps to expeditiously review requests for approvals to construct and operate the pipeline per an order by President Donald Trump.  However, the project's easement has not yet been approved.    

The arbitrage from the US Gulf coast remained extremely limited, with about 700,000 tons of diesel expected to be imported on the route in February. 

IIR reported that US oil refiners are expected to shut in 980,000 bpd of capacity in the week ending February 3rd, cutting available refining capacity by 104,000 bpd from the previous week. 


Early Market Call - as of 9:00 AM EDT

WTI - Mar $53.70, down 12 cents

RBOB - Mar $1.5644, up 1.07 cents

HO - Mar $1.6701, up 50 points 


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Wednesday's EIA report indicating strong builds in U.S. supplies drove oil prices lower

February 03, 2017

Recap: Oil futures edged higher, with March WTI trading closer to $55, and April Brent closing in on $58. Both of these levels represent tops of a continuation pattern. Briefly adding to support were strong words by newly elected U.S. President, Donald Trump, issuing a warning to Iran after the country recently fired a missile during a test. All was disregarded, as prices traded below unchanged. Evidence that OPEC and other major oil producers are indeed cutting back on output, along with Wednesday's EIA report showing strong builds in U.S. gasoline and crude oil supplies, drove prices lower.  The March WTI settled down 34 cents or 0.63% at $53.54 while the April Brent settled down 24 cents or 0.42% at $56.56/barrel. 

March RBOB fell 4.62 cents, or 2.93%, to $1.5329 a gallon and March heating oil fell 2.22 cents, or 1.33%, to $1.6518 a gallon.

Fundamental NewsGenscape reported that crude oil stocks held in the Cushing, Oklahoma fell by 58,000 barrels in the week ending January 27th.

Saudi Arabia's Energy Minister, Khalid al-Falih, said Saudi Aramco is likely to list its shares simultaneously on more than one exchange but this is still under evaluation.  The planned listing next year of up to 5% of Aramco is a centerpiece of the Saudi government's plan to diversify the economy beyond oil. 

Russia's Energy Minister, Alexander Novak, said Russian companies may cut oil production quicker than had been initially agreed with OPEC. He said it is possible the companies will speed up oil output cuts in February.  Russia cut oil production by 100,000 bpd in January and plans to further cut output by 300,000 bpd by the end of April as part of the deal with OPEC.  Russia's Energy Ministry reported that Russia's oil output stood at 11.11 million bpd in January, down from 11.21 million bpd in December.     

OPEC and non-OPEC producer Russia are shielding Asia from supply cuts agreed in the OPEC deal to cut production.  Instead, they have reduced deliveries to Europe and the Americas as they implement a coordinated agreement to cut supply by about 1.8 million bpd.  OPEC's oil supplies to Asia increased by 7% between November and January to 1.7 million bpd, meeting two-thirds of the region's oil consumption. 

Iran's Foreign Ministry spokesman, Bahram Ghasemi, said the US National Security Advisor's comments on the recent ballistic missile test were repetitive, baseless and provocative.  Meanwhile, a top adviser to Supreme Leader, Ayatollah Ali Khamenei, said Iran will not yield to US threats over a recent ballistic missile test that was aimed at limiting its defense capabilities.

According to Platts' cFlow, seven ships carrying 2.3 million barrels of gasoline are headed to the Atlantic Coast over the next week. 

According to the EIA, US refined product exports to Mexico increased by 45,000 bpd to 997,000 bpd in November, as Mexico continues to struggle with falling crude production and refinery throughput.  Separately, the EIA also reported that George E Warren, Vitol and Irving Oil were the three largest importers of gasoline and gasoline blendstocks into the US in November.  The EIA reported a total of 23.7 million barrels of gasoline and gasoline blendstocks came into the US in November. 

Gasoline stocks held in independently held storage in the Amsterdam-Rotterdam-Antwerp hub in the week ending February 2nd fell by 10.71% on the week and by 6.43% on the year to 1.092 million tons.  Gasoil stocks fell by 0.24% on the week and by 6.96% on the year to 3.288 million tons while fuel oil stocks increased by 14.7% on the week but fell by 34.14% on the year to 710,000 tons. 


Early Market Call - as of 9:00 AM EDT

WTI - Mar $53.53, down 1 cent

RBOB - Mar $1.5212, down 1.14 cents

HO - Mar $1.6460, down 56 points


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EIA reported 6.47 million barrel build in U.S. inventories

February 02, 2017

Recap: Oil futures continue to consolidate between $51 and $55 as the world awaits for concrete evidence that OPEC is indeed curtailing output. March WTI slipped from early gains after the EIA reported a 6.47 million barrel build in U.S. inventories, far greater than the expected 3.1 million barrel increase. Losses were limited by the 46,000 barrel weekly decline in U.S. production.  March WTI climbed $1.07, or 2%, to settle at $53.88 a barrel, the highest settlement since Jan. 6. April Brent tacked on $1.22, or 2.2%, to $56.80 a barrel.

Upon examination of the March RBOB crack spread for the period of November - February dating back to 2013 through the present, it is worth noting that the value of the March17 spread appears to be overvalued given the current level of RBOB stocks held in PADD 1. While this spread tends to gain as it reaches expiration, PADD 1 stocks are at record highs and have increased for the past 5 weeks. While the March17 crack is within ranges of the past 2 years, high PADD 1 stocks could break the seasonality of this spread to post gains prior to expiry. 

March RBOB rose 2.9 cents, or 1.9%, to $1.579 a gallon and March heating oil added 4.3 cents, or 2.7%, to $1.674 a gallon.

Fundamental NewsThe Louisiana Offshore Oil Port delivered over 1,520,000 barrels of sour crude from storage in January. 

Saudi Arabia's Minister of Energy, Industry and Mineral Resources, Khalid al-Falih, said the country may increase its oil investments in the US due to a more fossil fuel-oriented energy policy by the US administration of President Donald Trump.  He also stated that OPEC will have a healthy dialogue with the US administration and is looking forward to coordinating with the US on energy policies. 

BMI Research said Saudi Arabia is investing to keep large amounts of spare production capacity as it seeks to enforce a soft ceiling.  Total capacity is reported at 12 million to 12.5 million bpd, which implies a buffer of more than 2 million bpd based on current output. 

Russia has cut its oil and gas condensate production in January by about 100,000 bpd to 11.11 million bpd. 

According to a Reuters survey, Iraq significantly reduced its oil production in January.  Iraq cut its output by 200,000 bpd on the month. 

According to Bloomberg, oil flows out of Iraq suggest that Iraq is complying with OPEC's agreement to cut output.  Observed shipments in January were 109,000 bpd below October's level, the month used as a baseline for OPEC's reduction plan.  This indicates that Iraq has implemented about 50% of the production cut it agreed to.  Shipments from Iraq fell to 3.805 million bpd in January from December's 4.03 million bpd. 

Kuwait's exports of crude averaged 2 million bpd in January compared with 2.215 million bpd in October, the baseline month for measuring output cuts.  The fall in exports compares with the 131,000 bpd production cut agreed by Kuwait. 

Gunvor's head of oil market research, David Fyfe, said an extension of OPEC oil production cuts could push oil prices too high to meet Saudi Arabia and others' objective of balancing the market without encouraging US shale output.  He said OPEC had already started to achieve some of its aims, creating a virtual price floor of $50/barrel. 

IIR reported that US oil refiners are expected to shut in 994,000 bpd of capacity in the week ending February 3rd, cutting available refining capacity by 118,000 bpd from the previous week.  IIR expects offline capacity to increases to 1,175,000 bpd in the week ending February 10th. 


Early Market Call - as of 9:00 AM EDT

WTI - Mar $54.01, up 13 cents

RBOB - Mar $1.5774, down 17 points

HO - Mar $1.6841, up 96 points 


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Products lead the market higher following a leak from Seaway Crude Pipeline

February 01, 2017

Recap: Products lead the market higher on Tuesday after reports that Enterprise Products Partners shut its Seaway Crude Pipeline, following a leak reported after a third party contractor hit the line.  The Seaway Crude Pipeline moves oil from Cushing, OK to Gulf Coast refineries.  The March RBOB crack spread, which peaked at $16.40 in December, has fallen 28% on rising inventories. On the aforementioned news, this spread rebounded 53 cents on the day, settling at $12.29. With East Coast gasoline stocks reaching record levels amid slumping demand, this pop in the crack spread may very well provide another opportunity to sell.

February RBOB gained 2.01 cents, or 1.3%, to $1.5256 a gallon. Despite posting a daily gain, RBOB futures fell 8.4% on the month, marking the worst monthly drop since July. February heating oil posted a modest gain of .5 cent, or 0.3%, to $1.6117 a gallon, but shed 5.4% on the month, also marking its worst monthly drop since July.

As with the products, March WTI posted a daily gain, but finished out the month of January lower on month to month basis. This spot contract added 18 cents, or 0.3%, to settle at $52.81 a barrel, but 1.7% lower on the month. March Brent finished up 47 cents, or 0.9%, settling at $55.70 a barrel. This was down almost 2% from December.

Fundamental News: According to a Reuters survey, OPEC's oil output is expected to fall by more than 1 million bpd in January.  Supply from the 11 OPEC members with production targets under the deal has averaged 30.01 million bpd, down from 31.17 million bpd in December.  Compared with levels that the countries agreed to make the reduction, OPEC members have cut production by 958,000 bpd of the pledged 1.164 million bpd, equating to 82% compliance.

Enterprise Products Partners said it shut its Seaway Crude Pipeline following a leak in Texas on Monday afternoon.  The 400,000 bpd Legacy pipeline experienced a leak from its 30 inch diameter S-1 line after being struck by a third party contractor.  The incident did not result in fire or injuries.  Enterprise said it started that process of cleaning up crude oil released from the pipeline.  The company added it was working with government officials to coordinate clean-up operations and develop a plan to resume operations as quickly and safely as possible.  The 450,000 bpd Seaway Twin line, which runs parallel to Legacy, was also shut briefly as a precaution and resumed service later on Monday.  

Colonial Pipeline Co is allocating space for Cycle 9 shipments on Line 20, which carries distillates from Atlanta, Georgia to Nashville, Tennessee. 

Colonial Pipeline told shippers that it is again filing changes to the minimum tender and rounding process, two parts of a tariff that was rejected last summer by the US Federal Energy Regulatory Commission.  The pipeline operator refiled a tariff with FERC to implement changes that will reduce the minimum batch size on the line and reduce the rounding increment for allocating capacity on the line.  The changes would be implemented on Colonial's 19th cycle, the first cycle in April. 

According to cFlow, S&P Global Platts trade flow software, about 980,000 metric tons of distillates loaded from the US Gulf Coast has discharged or is set to discharge in Northwest Europe and the Mediterranean basin in January.

Bloomberg reported that preliminary US waterborne crude imports fell by 435,600 bpd to 4.7 million bpd in the week ending January 26th. 

IHS data compiled by Bloomberg showed that crude and refined product shipments from the US Gulf increased to 4 million metric tons on 99 ships in the week ending January 26th.  It is up 12.4% from the previous week's 3.56 million metric tons on 89 ships. 

Early Market Call - as of 9:00 AM EDT

WTI - Mar $53.32, up 51 cents 

RBOB - Mar $1.5832, up 3.31 cents

HO - Mar $1.6534, up 2.26 cents  


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Oil futures continue to fall as number of active US oil rig count has increased for two weeks

January 31, 2017
Recap:  Oil futures continued to fall in reaction to last week's Baker Hughes report showing that the number of active U.S. oil rigs has increased for two straight weeks. This outweighed efforts by OPEC and other major producers to prop up prices by curtailing output. March WTI fell 54 cents a barrel, or 1%, to settle at $52.63 a barrel. March Brent lost 29 cents, or 0.52%, to settle at $55.23 a barrel.

February RBOB lost 2.2 cents, or 1.4%, to $1.506 a gallon and February heating oil shed 1.2 cents, or 0.8%, to $1.607 a gallon. Both contracts expire at the settlement on Tuesday.

Fundamental News:  Genscape reported that crude oil held in Cushing, Oklahoma in the week ending January 27th fell by 1.5 million barrels.

Kuwait's Oil Minister, Ali Al-Omair, said the degree of oil producing countries' compliance with the output cut agreement is encouraging so far. 

The IEA's Director, Fatih Birol, said it does not expect oil demand to peak any time soon due to rising consumption in developing economies.  He also warned that oil markets could enter a period of high volatility unless companies develop new projects after two years of sharp declines in investments prompted by low oil prices.

Petrologistics reported that OPEC is set to fall by 900,000 bpd in January, pointing to a strong start by the exporter group in implementing a supply cut deal. 

Iran's Oil Minister, Bijan Zanganeh, said that he expects the oil prices to remain at around $55/barrel this year.  He said producers were comfortable with oil prices in a range of $55-$60/barrel, adding that if prices increased to $70/barrel, it could disturb the balance between supply and demand. 

According to a loading program obtained by Bloomberg, Nigeria is expected to export 1.71 million bpd of crude in March, up from 1.707 million bpd in February.  Separately, according to loading programs compiled by Reuters, Nigeria's oil exports are expected to reach 1.62 million bpd in March on 55 cargoes, up from a revised February loading schedule of 1.48 million bpd on 46 cargoes. 

Nigeria's Trans Forcados Pipeline, which has been shut for most of the past year due to several militant attacks, could reopen towards the end of the second quarter. 

Magellan Midstream Partners said it resumed operations on its pipeline between Rosemount, Minnesota and Mason City, Iowa on Saturday morning after it was shut in due to a spill.  The cause of the incident remain under investigation.  

A spokesman for Libya's Arabian Gulf Oil Co said a leak in an oil pipeline temporarily halted operations at the country's eastern Messla oil field on Monday.  Repair work was expected to be completed within a day.  The field produces about 70,000 bpd. 

Mexico's three largest oil export port were closed due to wind and waves. 

According to Bloomberg, total US waterborne LPG exports from Houston, Port Arthur, Philadelphia and Seattle fell by 0.9% to 1.08 million bpd in the week ending January 26th.  It is down from 1.09 million bpd the previous week. 

Mexico's Finance Minister, Jose Antonio Meade, said will announce new gasoline prices on Friday.  They are still evaluating the price.  He also stated that Mexico has seen a major decline in oil production.  

Early Market Call - as of 9:00 AM EDT
WTI - Mar $53.12, up 49 cents
RBOB - Feb $1.5375, up 3.2 cents
HO - Feb $1.6288, up 2.21 cents