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Market Intel Archives

Oil prices close at their lowest level in 2 weeks

October 04, 2017

Recap: Trading in oil was quiet on Tuesday, with both Brent and WTI experiencing inside trading sessions.  Prices posted modest losses, closing at their lowest level in 2 weeks, as traders continued to take profits. December Brent slipped 12 cents, or 0.21%, to settle at $56.00 a barrel, while November WTI settled at $50.42 a barrel, down 16 cents, or 0.32%. 

OPEC had been hinting at extending production cuts, however, September adherence to the agreed upon cuts fell to 80%, making it less likely that an agreement could be reached. This raised concern that global rebalancing of this market would take longer than anticipated.

November RBOB settled at $1.566 a gallon, up a penny, or 0.7%, while November heating oil fell 1.6 cents, or 0.9%, to $1.751 a gallon.

Fundamental News: According to Bloomberg, crude stocks held in Cushing, Oklahoma increased by 1.8 million barrels to 62.7 million barrels in the week ending September 29th. 

OPEC’s Secretary General, Mohammad Barkindo, said compliance with the oil output cut agreement between OPEC and non-OPEC producers is extremely high.  He added that the cartel was looking forward to strengthening its cooperation with Russia.  The OPEC Secretary, on a visit to Moscow to attend an energy conference, also stated that he expected all 24 OPEC and non-OPEC countries participating in the global oil output cut deal to take part in OPEC’s conference in November. 

Russia’s Energy Minister, Alexander Novak, said officials from oil producing countries will discuss the global market and the mechanism for overseeing oil exports under the OPEC output cut deal at an energy meeting in Moscow this week.  He said there is no immediate need to talk about additional output cuts as part of the OPEC and non-OPEC agreement.  Separately, he stated that world oil demand is growing above expectations this year and it is already 1.4 million bpd higher than last year’s level.   

Saudi Arabia is looking at unprecedented deals to acquire oil and gas assets in Russia as Saudi King Salman prepares to visit Russia later this week. 

According to a Bloomberg survey, OPEC producers pumped slightly more crude in September as Libya’s largest oil field resumed operations.  OPEC’s output totaled 32.83 million bpd in September, up 120,000 bpd on the month.  It reported that Libya’s oil production increased by 30,000 bpd to 920,000 bpd in September.  Nigeria’s output increased by 20,000 bpd to 1.77 million bpd.  Meanwhile, Saudi Arabia increased its production by 60,000 bpd to 10.06 million barrels, while Kuwait increased its output by 50,000 bpd to 2.76 million bpd.  The compliance rate of the 12 members bound by output cut agreement fell to 82% in September from 88% in August.   

Libya’s Sharara oil field remained closed on Tuesday morning, two days after an armed brigade shut it down over salary claims and other demands.  On Monday, Libya’s National Oil Corp said it was working to swiftly reopen the field, which was pumping more than 230,000 bpd before it closed late on Sunday.  

Occidental Petroleum Corp said operations returned to pre-Hurricane Harvey levels.  It said Hurricane Harvey caused minimal disruptions to operations. 

Bloomberg reported that preliminary US waterborne crude imports increased by 422,200 barrels to 4.8 million bpd in the week ending September 28th. 

Genscape reported that US crude oil exports increased by 5.754 million barrels to 9.274 million barrels for the week ending September 22nd.

Early Market Call - as of 9:00 AM EDT

WTI - Nov $50.31  -0.11

RBOB - Nov $1.5628  -0.0027

HO - Nov $1.7578  +73


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Oil prices fell to their lowest level in over a week

October 03, 2017

Recap: Oil prices fell to their lowest level in over a week, as the dollar strengthened and after recent data showed OPEC’s compliance to supply cuts fell in September. WTI fell by more than 3% before paring losses, while Brent lost as much as 2% during trading on Monday. November WTI settled at $50.58 a barrel, down $1.09, or 2.11%. Brent for December delivery slipped 67 cents, or 1.18%, to settle at $56.12 a barrel.

Based upon WTI’s performance over the past 5 years, prices have not fared well during the fourth quarter of the year. Taking this into account, Friday’s sell-off, which continued into Monday, could be the beginning of what is the norm for prices during the last three months of the year. Discounting 2014, when OPEC initiated a price war within itself, spot WTI fell on average, 14.8% during the fourth quarter.

November RBOB fell 3.6 cents, or 2.2%, to $1.555 a gallon, while November heating oil lost 4.4 cents, or 2.4%, to $1.767 a gallon.

Fundamental News: Genscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending September 29th increased by 1,611,477 barrels on the week but fell by 323,487 barrels from Tuesday, September 26th to 64,791,004 barrels. 

Saudi Arabia’s leadership of OPEC and non-OPEC production cuts comes at a cost.  It is cutting its export volumes and losing market share in key destinations to countries that are also part of the output deal.  It has lost ground to rivals selling in some of its Asian export markets, most particularly China and India.  It has also seen flows to the US fall to some of the lowest levels of recent years.  Saudi Arabia is no longer China’s largest supplier, as Russia has overtaken its spot while Saudi exports to India have been overtaken by supplies from Iraq, which increased in the first months after output cuts came into effect in January.  Also, the picture is starker for crude sales to the US.  Imports of Saudi crude to the US fell to 637,000 bpd in the week ending September 22nd. 

Libya’s oil production fell to 750,000 bpd from 985,000 bpd after the Sharara oil field was shut down on Sunday.  The oil field was closed after an armed group forced workers at the field to stop pumping on Sunday.  Libya’s National Oil Corp declared a force majeure on deliveries from the oil field later on Monday.  The Sharara was pumping 235,000 bpd before the halt.  The NOC’s chair said Libya’s oil production is expected to recover to 1 million bpd in the next two to three days as the oil field is expected to restart operations on Tuesday. 

Russia’s Energy Minister, Alexander Novak, said Saudi Arabia and Russia will set up a new $1 billion fund to invest in energy, which will be finalized during the upcoming visit of Saudi King Salman to Moscow this week.  Russia’s Energy Minister said he was satisfied with oil cooperation with Saudi Arabia as a leading member in OPEC.  He said oil prices are stabilizing between $50-$60/barrel, which is a suitable level. 

Iraq’s Oil Ministry reported that the country exported an average of 3.24 million bpd in September, up from 3.216 million bpd in August.  The country generated more than $4.88 billion from oil sales in September, with a barrel selling for $50.23/barrel on average. 

IIR reported that US oil refiners are expected to shut in 1.116 million bpd of capacity in the week ending October 6th, increasing available refining capacity by 537,000 bpd from the previous week. 

Early Market Call - as of 9:00 AM EDT

WTI - Nov  $50.29, down 30 cents

RBOB - Nov $1.5463, down 88 points

HO -Nov $1.7472, down 1.92 cents


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Oil prices posted quarterly gains for the first time this year

October 02, 2017

Recap: Oil prices posted quarterly gains for the first this year, as they were racked by an array of news spanning between OPEC compliance to proposed cuts, the possibility of additional cut, hurricanes affecting U.S. production and demand, and geopolitical strife. After reaching a 10-month low in June, WTI has recaptured 73% of its fall from January highs, while Brent during the same time period, recaptured 94% of its fall from January highs. WTI finished the quarter at $51.67 a barrel, up 11 cents or 0.21% from Thursday’s close, while Brent tacked on 13 cents or 0.23%, to settle at $57.54 a barrel  

October RBOB fell 2.5 cents, or 1.6%, to $1.607 a gallon, with the contract up about 14% for the quarter, while October heating oil fell 2 cents, or 1.1%, to $1.812 a gallon, ending up over 21% for the quarter.

Fundamental News: Baker Hughes reported that US energy companies added oil rigs for the first week in seven after a 14 month recovery stalled in August.  Drillers added six oil rigs in the week ending September 29th. 

Oil Movements reported that OPEC’s oil shipments are expected to increase by 130,000 barrels to 23.96 million bpd in the four week period ending October 14th, compared with the four week period ending September 16th. 

Reuters reported that OPEC’s oil output in September increased by 50,000 bpd to 32.86 million bpd, as Iraqi exports increased and production increased in Libya.  OPEC’s adherence to the pledged supply cuts fell to 86% from August’s 89%.  Iraq’s production increased by 40,000 bpd due to higher exports from the Kurdish region.  Saudi Arabia increased its production by 20,000 bpd.  Meanwhile, Libya produced an extra 50,000 bpd in September as the Sharara field resumed operations after a pipeline blockade. 

According to a Reuters survey, oil prices are unlikely to increase much beyond this month’s two-year highs this year.  Brent crude is expected to average $52.60/barrel in 2017, up from last month’s forecast of $52.53/barrel.  For 2018, Brent crude is expected to average $54.40/barrel compared with the previous month’s forecast of $54.48/barrel.  The price of WTI crude is forecast to average $49.88/barrel in 2017 and $51.61/barrel in 2018, compared with a previous forecast of $50.01 and $51.92/barrel, respectively.  Meanwhile, US shale production is set to increase for the 10th consecutive month in October to a record 6.1 million bpd.   

The semi-official Tasnim news agency reported that Iran has banned the transportation of refined crude oil products by Iranian companies to and from Iraq’s Kurdistan region after Iran vowed to stand by Baghdad following the region’s vote for independence. 

IIR reported that US oil refiners are estimated to shut in 1.68 million bpd of capacity in the week ending September 29th, increasing available refining capacity by 173,000 bpd from the previous week.  IIR expects offline capacity to fall to 1.237 million bpd in the week ending October 6th and to 1.309 million bpd in the subsequent week.

According to Bloomberg, global refinery outages reached 4.37 million bpd in the week ending September 29th.  It is down 5.2 million bpd from the previous week. 

The EIA reported that US crude oil production in July increased by 141,000 bpd to 9.24 million bpd.  Output increased by 21,000 bpd in Texas and by 14,000 bpd in North Dakota. 

Diesel exports from the US Gulf Coast to Europe and the Mediterranean continued to increase as refineries resume normal operations, with more than 600,000 tons now expected to arrive in October.

Early Market Call - as of 9:00 AM EDT

WTI - Nov  $52.22, down $1.45

RBOB - Nov $1.5478, down 4.3 cents

HO -Nov $1.7620, down 4.82 cents


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EIA report showed U.S. crude oil inventories decreased due to an increase in exports

September 29, 2017

Recap: Oil prices began the session trading above unchanged. Although Brent was unable to take out the previous session’s high, WTI had no problem doing so, as it gained momentum from yesterday’s EIA report indicating a rise in U.S. exports. Despite posting these early gains, oil prices fell after Genscape reported a build in U.S. stockpiles held at Cushing, OK, the NYMEX delivery point. November Brent settled at $57.41 a barrel, down 49 cents, or 0.85%, while WTI for November delivery fell 58 cents, or 1.11%, to settle at $51.56.

With yesterday’s EIA report showing an unexpected 1.8 million barrel decrease in U.S. crude oil inventories, due to an increase in exports, WTI narrowed its discount to Brent. Thursday’s Genscape report reversed the trend, as the discount widened once again. So far, the discount on this spread has narrowed by 5.6%, and finished the session at -$5.85.

Fundamental News: Genscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending Tuesday, September 26th increased by 2,736,285 barrels on the week and by 1,934,964 barrels from Friday, September 22nd to 65,114,491 barrels. 

OPEC Secretary General, Mohammad Barkindo, said there are clear signs that the market is rebalancing.  However he added that now is not the time to let up. 

OPEC and industry sources stated that Middle East OPEC producers are concerned weak demand and excess supply in the first quarter of 2018 may undermine an oil price rally that has pushed Brent crude about 30% higher since June.  A senior Gulf oil industry source said he doesn’t believe the rally is sustainable, citing possible excess supply from US shale oil producers in the first few months of 2018 on the back of higher prices.  A second industry source from a main Middle East producer said the price rally may be short-lived. 

Russia’s Energy Minister, Alexander Novak, said it is preferable to end the OPEC and non-OPEC cuts in the summer when demand is on a seasonally rising trend. 

According to a Bloomberg strategist, Libya will not join in OPEC output cuts when the group meets on November 30th, nor accept a meaningful limit on production that would actually restrict its output in 2018. 

A Kuwait Petroleum Corp official expects OPEC to extend its oil supply cuts beyond March 2018. 

The Trump administration is considering a policy change that could allow an extra billion gallons or more of biofuel each year to qualify toward a US mandate, lowering costs for refiners at the expense of ethanol producers.  The change by the EPA would increase the number of available compliance credits available.  Meanwhile, the price of US renewable fuel credits continued to decline.  The price of renewable fuel (D6) credits fell to 66 cents on Thursday, down 15 cents on the day and the lowest price since May. 

Genscape reported that domestic US crude is less expensive than imports for East Coast refiners.  Total rail shipments of Bakken oil increased to 300,000 barrels on Monday. 

Gasoline stocks held in independent storage in the Amsterdam-Rotterdam-Antwerp terminal in the week ending September 28th increased by 2.94% on the week and by 10.98% on the year to 839,000 tons.  Gasoil stocks increased by 0.66% on the week but fell by 18.4% on the year to 2.606 million tons. 

Early Market Call - as of 9:00 AM EDT

WTI - Nov  $51.45, down 11 cents

RBOB - Oct $1.6061, down 86 points

HO -Oct $1.8190, down 1.27 cents


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Oil prices were mixed after the EIA reported a decline in U.S. crude oil inventories

September 28, 2017

Recap: Oil prices were mixed on Wednesday after the EIA reported U.S. crude oil inventories declined for the first time in four weeks. Brent slipped from its 2-year high, while WTI held on to gains, while it traded in an inside fashion.

November Brent settled at $57.90 a barrel, down 54 cents, or 0.92%, while November WTI tacked on 26 cents, or 0.50%. 

Gasoline stocks surprisingly rose, while distillate stocks decreased less than expected. As a result, October RBOB fell 4.5 cents a gallon, or 2.6%, to settle at $1.654 a gallon. Heating oil for October delivery finished close to unchanged, settling at $1.846 a gallon.

Fundamental News: The EIA reported that US weekly crude production increased to 9.55 million bpd in the week ending September 22nd, up from 9.51 million bpd a week earlier.  It also reported that crude exports reached a new one-week record of 1.49 million bpd.

Saudi Aramco’s trading arm will start trading non-Saudi crude oil to mainly feed its international joint ventures as the company seeks to optimize profits.  The expansion into crude comes as Saudi Aramco is working to increase its valuation ahead of the planned listing of up to 5% of its shares on one or more international stock exchanges next year. 

Venezuela’s Oil Minister, Eulogio del Pino, is expected to visit Moscow early next month to take part in the Russian Energy Week forum on October 3-7. 

According to DNB, the offshore drilling market will take a long time to rebalance as more consolidation and rig retirements are needed to cut oversupply. 

US biofuels credits fell on Wednesday, extending a decline on news that regulators are considering larger cuts to renewable fuels use requirements.  Prices of renewable fuel (D6) credits fell to 73 cents each on Wednesday, down from 83 and 83.5 cents previously.  The biomass-based diesel credits (D4) were 86 cents each, down from $1.04-$1.05 on Tuesday.   

Colonial Pipeline Co is allocating space for Cycle 57 shipments on Line 20, which carries distillates from Atlanta, Georgia to Nashville, Tennessee. 

The Texas Railroad Commission reported that crude oil production in the state fell less than 1% in July compared with the same month a year ago to 75.3 million barrels. 

IIR reported that US oil refiners are expected to shut in 1.593 million bpd of capacity in the week ending September 29th, increasing available capacity by 384,000 bpd from the previous week.  IIR expects offline capacity to fall to 1.172 million bpd in the week ending October 6th. 

The Texas Railroad Commission reported that crude oil production in the state fell less than 1% in July compared with the same month a year ago to 75.3 million barrels. 

Genscape reported that North Dakota’s crude-by-rail terminal loadings for September increased for the first time since March to about 140,000 bpd in the week ending September 22nd.  September’s increase comes after August finished at its lowest level since January 2012 at 114,000 bpd. 

 

Early Market Call - as of 9:00 AM EDT

WTI - Nov  $52.63, up 49 cents

RBOB - Oct $1.6222, up 2 points

HO -Oct $1.8477, up 9 points


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Oil futures fell as U.S. oil inventories increased for fourth straight week

September 27, 2017

Recap: Oil futures fell from fresh two year highs as traders took profits on signs that the rally may have gotten a bit ahead of itself. Pressure was also provided by expectations that U.S. oil inventories increased for the fourth straight week. Brent fell back below $59 a barrel, to settle at $58.44, down 58 cents, or 1%, while WTI lacked the strength to remain above $52 a barrel, settling at 51.88, down 34 cents, or 0.7%.

In Brent, the 50-day moving average crossed above the 200-day moving average. Such a cross is known as a “Golden Cross” and signifies a bull market is coming. However, moving oscillators have crossed to the downside, providing a bit of divergence in technical indicators. With the November contract hugging the 10-day moving average, we would look to use this average, currently set at $56.39, as a current floor for this market. Breaks below will be followed by additional selling, making the 50 and 200-day moving averages, which are $52.80 and $52.62 levels of support. 

October RBOB fell 2.3 cents, or 1.4%, to $1.699 a gallon, while October heating oil slipped 1.1 cents, or 0.6%, to $1.845 a gallon.

Fundamental News:  A former Saudi energy ministry official, Ibrahim al-Muhanna, said oil prices may increase to $60/barrel by the end of the year or by early 2018 as OPEC and non-OPEC producers are expected to extend supply cuts beyond March, while oil inventories continue to decline.  He said global commercial stocks are being drawn down gradually, more slowly than initially hoped, and oil demand is growing by more than 1.5 million bpd this year, with increased growth forecast for next year. 

Trafigura said global oil demand may exceed world crude supply by 2 to 4 million bpd by the end of 2019 as exploration spending has declined amid the fall in prices.  A Trafigura executive pointed to a decline in exploration spending in 2016 to about $300 billion from $700 billion two years earlier as a reason supply will eventually fall below demand. 

The Iraqi government ruled out talks on possible secession for Kurdish-held parts of northern Iraq on Tuesday after a referendum on independence showed strong support for a split.  Initial results of Monday’s vote indicated 72% of eligible voters had taken part and an overwhelming majority, possibly over 90%, had voted for independence.  Kurdistan Regional Government President, Masoud Barzani, said the vote is not binding, but meant to provide a mandate for negotiations with Baghdad and neighboring countries over the secession of the region from Iraq. Later Tuesday the Iraqi government ordered the Kurds to hand over control of their airports to the central Iraqi government within three days or face an international embargo on flights. Meanwhile Iranian-backed Shi’ite groups have threatened to march on Kirkuk and “liberate” it from current Kurdish control. In addition the Iraqi central government has asked foreign countries to stop oil trading with the Kurdish region.

PBF Energy cut rates at its Paulsboro, NJ and Delaware City, Delaware refineries as choppy seas off the Atlantic Coast stalled crude deliveries.  The cuts are expected to last a few days.

Royal Dutch Shell Plc reported that planned maintenance in progress at its 325,700 bpd Deer Park, Texas refinery may cause flaring. 

 

Early Market Call - as of 9:00 AM EDT

WTI - Nov $52.07, up 18 cents

RBOB - Oct $1.6782, down 2.06 cents

HO - Oct $1.8534, up 83 points


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Brent crude oil surged to its highest level in over 2 years

September 26, 2017

Recap: Brent crude oil surged to its highest level in over 2 years, as the November contract rose above $59 a barrel. WTI rose above $52 a barrel to a 5-month high. Prices garnered strength from increasing demand out of China and concern that the Iraqi Kurdistan referendum on independence would disrupt crude oil exports from that region. November Brent gained $2.16, or 3.8%, to settle at $59.02 a barrel, while November WTI settled at $52.22 a barrel, up $1.56, or 3.08%.

October RBOB rose 5.4 cents, or 3.2% to $1.722 a gallon, while October heating oil added 4 cents, or 2.2%, to $1.856 a gallon.

Fundamental News: Genscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending September 22nd increased by 1,176,728 barrels and by 801,321 barrels from Tuesday, September 19th to 63,179,527 barrels.

The monitoring committee overseeing the OPEC/non-OPEC output agreement saw no need to recommend deeper cuts or any extension of the deal on Friday, saying it was too early.  However, they added that they would incorporate export data to increase trader confidence that the cuts are, in fact, lowering supplies to the market.  OPEC and non-OPEC producers may start monitoring exports after November.  The move to monitor exports comes despite misgivings from some members.  Russia’s Energy Minister, Alexander Novak, has previously noted that crude exports from his country had high variability, depending on refinery runs, seasonality and maintenance.  Meanwhile, Nigeria’s Oil Minister, Emmanuel Kachikwu, said he would not be surprised if OPEC begins to change its compliance focus from production to exports. 

Iran’s Oil Minister, Jabbar al-Luaibi, said OPEC’s compliance with the output cuts is acceptable.  However he stated the group needs to address rising output from Libya and Nigeria.  Separately, the director of international affairs at National Iranian Oil Co said Iran will persist with exporting its oil to global customers, despite President Trump’s intensifying offensive against the country.  Iran is exporting a combined 2.6 million bpd of crude and ultra-light oil known as condensate, and expects to export more oil at the end of 2017.  Iran’s crude oil exports are expected to stabilize at around 2.1-2.3 million bpd until the end of 2017.  Its condensate exports are expected to fall to about 450,000 bpd from an average of 550,000 bpd in the past 15 months.   

OPEC’s Secretary General Mohammed Barkindo said OPEC will continue with its efforts until its goal of a fully balanced and growing, sustainable global oil market is achieved.  Separately, he stated that Middle East crude exports to Asia Pacific are expected to increase by 7.5 million bpd between 2016 and 2040 to fuel growth in emerging economies led by India and China.  Exports are expected to reach 22 million bpd from 14.5 million bpd during the period. 

The UAE’s Energy Minister, Suhail al-Mazroui said the country’s compliance with the OPEC and non-OPEC pact on global oil supply cuts stood at 100%.  He previously stated that Abu Dhabi National Oil Co had cut crude allocations by 10% in September and October.     

A top executive at BP’s trading arm said OPEC and its allies need to extend their crude production cuts beyond March 2018 to rebalance the global oil market. 

IIR reported that US oil refiners are expected to shut in 1.321 million bpd of capacity in the week ending September 29th, increasing available refining capacity by 568,000 bpd from the previous week.  IIR expects offline capacity to fall to 1.007 million bpd in the week ending October 6th.

Early Market Call - as of 9:00 AM EDT

WTI - Nov  $51.85, down 37 cents

RBOB - Oct $1.7122, down 93 points

HO -Oct $1.8278, 2.82 cents


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OPEC's Joint Ministerial Monitoring Committee did not come to an agreement regarding output cut on Friday

September 25, 2017

Recap: The November crude futures on Friday, posted an inside trading day after the Joint Ministerial Monitoring Committee, comprised of Algeria, Kuwait, Venezuela, Russia and Oman, did not make a recommendation on whether OPEC and non-OPEC producers should extend their output cut agreement beyond March 2018.  The market traded to a high of $50.78 in overnight trading.  However, as it failed to breach Thursday’s high of $50.81, the market erased its gains and sold off to a low of $50.29.  The oil market later bounced off its low and traded in a 40 cent trading range ahead of the close as it attempted to test its highs.  The November WTI contract settled up 11 cents at $50.66, while the November Brent contract settled up 43 cents at $56.86.  The product markets settled in positive territory, with the heating oil market settling up 10 points at $1.8163 and the RBOB market settling up 2.46 cents at $1.6684.

Fundamental News: Kuwait’s Oil Minister, Essam al-Marzouq, said that the oil market was well on its way towards rebalancing.  He said the backwardation in the oil market was a sign of declining inventories.  He also stated that Libya and Nigeria will contribute to the supply cut deal once their production stabilizes.  He stated that OPEC and the other producers will likely wait until the next meeting to decide on whether to extend the oil output cut deal. 

Venezuela’s Oil Minister, Eulogio Del Pino, said OPEC and other oil producers are evaluating all options in their efforts to reduce an oversupply, including extending their agreement to cut supplies that is due to expire in March.  He said the oil market was recovering very strongly. 

Russia’s Energy Minister, Alexander Novak, said OPEC and other oil producers will not make a decision until January on whether to extend their agreement to cut production.  He called on the countries who are not in full compliance with the oil supply cut deal to reach their targets.  He also stated that OPEC and other oil producers need to continue coordinated action and work on a strategy from April 2018.  He said OECD oil inventories had fallen to 3 billion barrels in August, while crude oil in floating storage had been falling since June. 

Nigeria’s Oil Minister, Emmanuel Ibe Kachikwu, said the country’s production is currently averaging 1.69 million bpd, below its 1.8 million bpd limit it agreed to under the OPEC and non-OPEC output cut agreement.  He said the oil producers will deal with an oil supply cut extension in March, if there is a need for an extension.  He also added that he would be happy to end the year with an oil price of $60/barrel.

A Libyan oil source stated that the country’s national oil production stood at about 900,000 bpd, down from about 1 million bpd in recent months. 

Baker Hughes reported that the number of rigs drilling for oil in the US fell by five to 744 in the week ending September 22nd. 

IIR reported that US oil refiners are expected to shut in 1.792 million bpd of capacity in the week ending September 22nd, increasing available refining capacity by 1.018 million bpd from the previous week.  IIR expects offline capacity to fall to 1.011 million bpd in the week ending September 29th and to 1.007 million bpd in the following week. 

 

Early Market Call - as of 9:00 AM EDT

WTI - Nov  $51.22, up 56 cents

RBOB - Oct $1.6827, up 1.46 cents

HO -Oct $1.8294, up 1.28 cents


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Oil market traded in and out of positive territory on conflicting signals regarding OPEC output cut agreement

September 22, 2017

Recap: On its first trading session as the spot contract, the November crude futures retraced some of its previous gains.  The market posted a low of $50.07 in overnight trading before it bounced off its low and rallied to a high of $50.81 by mid-day.  The market traded in and out of positive territory on conflicting signals from OPEC ministers about whether an extension of its current output cut agreement is on the table for Friday’s Joint Ministerial Monitoring Committee meeting.  While Kuwait’s Oil Minister stated that the OPEC/non-OPEC coalition was not ready to discuss an extension, Algeria’s Oil Minister said an extension would be discussed at the meeting.  The November crude contract settled down 14 cents at $50.55 while the November Brent contract settled up 14 cents at $56.43.  The product markets ended mixed, with the heating oil market settling up 83 points at $1.8153 and the RBOB market settling down 1.13 cents at $1.6438.   

Fundamental News: Genscape reported that crude stocks held in Cushing, Oklahoma in the week ending Tuesday, September 19th increased by 462,063 barrels on the week and by 375,407 barrels from Friday, September 15th to 62,378,207 barrels. 

Kuwait’s Oil Minister, Essam Al-Marzouq, said that compliance with the OPEC-led oil output cuts was very good and above 100%.  He also stated that the OPEC/non-OPEC coalition was not ready to discuss an extension of the deal, which currently calls for producers to reduce their output by 1.8 million bpd until March 2018.  The Joint Ministerial Monitoring Committee, which Kuwait’s Oil Minister chairs, is scheduled to discuss compliance and review market conditions on Friday.  Separately, an OPEC delegate said no common position has emerged on how long any extension of the supply cuts should last.   

Algeria’s Energy Minister, Mustapha Guitoni said OPEC would discuss extending the deal with non-OPEC producers. 

Russia’s Energy Minister, Alexander Novak, said OPEC and non-OPEC countries will discuss a monitoring procedure for oil exports at a meeting in Vienna. 

Iran’s President, Hassan Rouhani, said the nuclear deal between the Iran and the six world powers is good and cannot be renegotiated.  US President, Donald Trump, called the deal an embarrassment during his first speech at the UN on Tuesday. 

Germany’s Foreign Minister, Sigmar Gabriel, said any US move to abandon the Iranian nuclear deal would discourage other powers such as North Korea from negotiating an end to their own nuclear program. 

According to Euroilstock, European refining crude intake in August fell by 1.7% on the month and by 2% on the year to 10.557 million bpd.  Europe’s refinery output in August fell by 1.3% on the month and by 0.8% on the year to 11.153 million bpd.  It reported that European gasoline output increased by 0.9% on the month but fell by 3% on the year to 2.49 million bpd while its middle distillates output fell by 2.2% on the month and by 3.2% on the year to 5.652 million bpd.

Gasoline stocks independently held in Amsterdam-Rotterdam-Antwerp terminal in the week ending September 21st fell by 2.16% on the week but increased by 14.47% on the year to 815,000 tons.  Gasoil stocks fell by 1.71% on the week and by 18.28% on the year to 2.589 million tons. 

Early Market Call - as of 9:30 AM EDT

WTI - Nov  $50.50, down 5 cents

RBOB - Oct $1.6588, up 1.51 cents

HO -Oct $1.8152, down 7 cents 


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October crude contract settled in a sideways trading pattern before the EIA's weekly stock report

September 21, 2017

Recap: On its last trading session, the October crude contract posted a low of $49.75 in overnight trading and settled in a sideways trading pattern ahead of the release of the EIA’s weekly petroleum stock report.  The market later attempted to test its low following the release of the report, which showed a larger than expected build in crude stocks of close to 4.6 million barrels on the week.  However, the oil market bounced off its lows and rallied higher to $50.65 as traders seemed to dismiss the larger than expected build in stocks in light of the refinery closures following Hurricane Harvey.  Meanwhile, the November crude contract breached its previous highs from $50.85 to $50.88, as it rallied to a high of $51.11 in afternoon trading.  The October crude contract went off the board up 93 cents at $50.41 while the November contract settled up 79 cents at $50.69.  The product markets ended in positive territory, with the heating oil market settling up 3.44 cents at $1.8070 and the RBOB market settling up 1 point at $1.6551. 

Fundamental News: US President Donald Trump said he made a decision on whether the US will remain in the 2015 Iran nuclear pact but declined to reveal it as Iran promised not to be first to violate the deal.  The US President must decide by October 15th whether to certify that Iran is complying with the deal.  If he does not, the US Congress has 60 days to decide whether to reimpose sanctions waived under the agreement.   The prospect of the US reneging on the agreement has worried some US partners that helped negotiate it. 

Algeria’s Energy Minister, Mustapha Guitouni, said OPEC will discuss extending its production cut deal with non-OPEC producers to defend crude prices when they meet in Vienna on September 22nd. 

The joint OPEC/non-OPEC technical committee estimates that OPEC and other producing countries in August delivered 116% of their pledged oil output cuts.  It is up from 94% compliance in July. 

Exports of Nigeria’s Qua Iboe crude are expected to fall to 158,000 bpd in November.  The November loading program includes five cargoes, down from seven in October. 

Abu Dhabi National Oil Co has informed buyers in Asia it will reduce supplies of its Murban crude by 15% in November to comply with the OPEC and non-OPEC production cut agreement.  The cut for Murban supplies was slightly deeper than the 10% reduction in October because of oilfield maintenance.  It will also cut November Das crude supplies by 10% and Upper Zakum crude by 5%. 

Angola added four cargoes to its provisional loading program for November on Wednesday, bringing the total up to 48 cargoes or 1.54 million bpd.  It is lower than October’s loading program of 56 cargoes or 1.57 million bpd. 

Wood Mackenzie stated that production at the Permian Basin could peak as early as 2021 due to geological constraints.  It forecast that production in the Permian Basin will increase to more than 5 million bpd in 2025.  October production is pegged at 2.64 million bpd, according to the EIA.  

IIR reported that US oil refiners are expected to shut in 1.8 million bpd of capacity in the week ending September 22nd, increasing available refining capacity by 1.047 million bpd from the previous week.  IIR expects offline capacity to fall to 992,000 bpd in the week ending September 29th. 

Early Market Call - as of 9:09 AM EDT

WTI - Nov  $50.34 down 35 cents

RBOB - Oct $1.6369 down 1.82 cents

HO -Oct $1.8077  up 7 points


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