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Market Intel Archives

Release of EIA & API inventory report limited gains for oil futures

April 12, 2017

Recap: Production outages in Libya and Canada gave early rise to oil futures; however, gains were limited, as traders awaited the release of the API and EIA inventory report. May WTI traded 2 cents above its 200-day moving average of $53.21, only to be met by resistance. The lack of follow through spurred profit taking on the long side, pushing prices to the lows of the day. By late afternoon, prices reverted back to the upside on reports that Saudi Arabia expressed wishes to extend the OPEC output cuts for another 6 months, and as geopolitical tensions heat up. New highs were achieved, with May WTI extending beyond the aforementioned 200-day moving average. May WTI settled toward the high of the day, finishing at $53.43 a barrel, up 32 cents, or 0.60%. June Brent gained 25 cents, or 0.45%, to settle at $56.23 a barrel.

May RBOB fell 1.8 cents, or 1.2%, to $1.513 a gallon, while May heating oil lost 1.9 cents, or 1.4%, to $1.29 a gallon.

Fundamental News:  Bloomberg reported that crude stocks at Cushing, Oklahoma increased by 800,000 barrels in the week ending April 7th to 69.9 million barrels. 

According to the EIA’s Short-Term Energy Outlook, total world petroleum demand in 2017 is forecast to increase by 1.49 million bpd to 98.16 million bpd.  Demand in 2018 is expected to increase by 1.63 million bpd to 99.79 million bpd.  Meanwhile, total US oil demand in 2017 is expected to increase 250,000 bpd to 19.88 million bpd and by 340,000 bpd to 20.22 million bpd in 2018.  The EIA estimated that US gasoline demand is expected to fall by 30,000 bpd to 9.3 million bpd in 2017 but increase by 40,000 bpd to 9.34 million bpd in 2018 while distillate demand is forecast to increase by 70,000 bpd to 3.95 million bpd in 2017 and by 120,000 bpd to 4.07 million bpd in 2018.  US oil production is expected to increase by 350,000 bpd to 9.22 million bpd in 2017 and by 680,000 bpd to 9.9 million bpd in 2018. 

Saudi Arabia cut its production to 9.9 million bpd in March from 10 million bpd in February. 

Reuters reported that production from the 11 OPEC members with output targets under the deal averaged 29.757 million bpd in March. 

Libya’s oil production fell to 490,000 bpd after the Sharara field halted its output.  Production fell from 703,000 bpd after the country’s largest oil field stopped pumping for an undisclosed reason. 

Kuwait’s Oil Minister, Issam Almarzooq, said there are signs that global oil stocks are gradually declining. 

Russia’s Energy Minister, Alexander Novak, said the country’s oil output cuts will reach 250,000 bpd by mid-April.

Total estimated export volume on Aframaxes, Suezmaxes and VLCCs from Iranian ports in March fell to 2.35 million bpd from 2.409 million bpd in February. 

According to cFlow, S&P Global Platts trade flow software, just under 1,000,000 metric tons of distillates have departed from the US Gulf Coast for arrival in Europe in April. 

According to Bloomberg, preliminary US waterborne crude imports fell by 1.2 million bpd to 3.7 million bpd in the week ending April 7th. 

IHS reported that crude and refined product shipments from the US Gulf increased to 3.45 million metric tons on 85 ships in the week ending April 6th.  It is up 11% from the previous week’s 3.1 million metric tons on 75 ships. 

Early Market Call - as of 9:00 AM EDT

WTI - May $53.63, up 22 cents

RBOB - May $1.7636, up 59 points

HO - May $1.6633, up 1.28 cents


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Oil futures rose for fifth straight session

April 11, 2017

Recap: Both WTI and Brent traded within an extremely tight range throughout most of the session, only to rise to a new session high prior to the settlement period. May WTI rose back above the $53 mark, to settle at $53.08, up 84 cents, or 1.61%. Brent for June delivery rose 74 cents, or 1.34%, to settle at $55.98.

Oil futures rose for the fifth straight session, with the May futures closing in on its 200-day moving average, which is currently set at $53.21. Just beyond this average, is the upper trend line on the ascending channel that has been forming on a daily bar chart. For tomorrow’s session, this line is set at $53.80, making this the near term target. Support rests at $52.80, and below that at $52.30.

May RBOB finished up 1.2 cents, or 0.7%, to $1.758 a gallon, while May heating oil added 1.9 cents, or 1.2%, to $1.647 a gallon.

Fundamental News Genscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending Friday, April 7th increased by 129,875 barrels on the week and by 247,855 barrels from Tuesday, April 4th to 71,460,905 barrels. 

Libya’s state owned National Oil Corp declared force majeure on loadings of Sharara crude oil from the Zawiya oil terminal on Monday. The Sharara oil field was shut down on Sunday afternoon after an unknown group blocked a pipeline linking it to the Zawiya oil terminal. The oil field had been only back in operation for slightly more than a week after being shut down in late March. Sharara’s crude oil production had been running at 213,000 b/d before being shut down. The NOC had been hoping to boost output from the field to 270,000 b/d by the end of April.

Kuwait’s oil minister said Monday that he sees “positive indications in the decline of global oil inventories and expects improvement in oil market in coming months.” He also said he expects March compliance with the OPEC and non-OPEC production agreement will be shown to be “higher than previous couple of months”.

Enterprise Product Partners announced it will build a new 571 mile pipeline to transport volumes of NGLs from the Permian basin to the company’s NGL fractionation and storage complex in Mont Belvieu, Texas. The pipeline will have a 250,000 b/d capacity with the potential to be expanded to 600,000 b/d. The project is expected to be in service by 2Q2019.

Colonial Pipeline notified customers it was allocating space for Cycle 22 distillate shipments on Line 20.

Kazakhstan’s Energy Minister, Kanat Bozumbayev, said the country will deliver on its promise to OPEC to cut its output by an average of 20,000 bpd in the first half of the year from the 1.7 million bpd it produced in November. 

Iraq’s Kirkuk oil fields have halted pumping for three days, according to North Oil Company.  The halt in shipments from Kirkuk in north Iraq will not impact exports via Turkey’s Ceyhan port because the terminal’s storage contains enough oil for export for several days. 

IIR estimated Monday that U.S. oil refiners are expected to have 763,000 b/d of capacity off line in the week ending April 14th, increasing the available refinery capacity by 177,000 b/d from the previous week.

Early Market Call - as of 9:00 AM EDT

WTI - May $53.07, down 1 cent

RBOB - May $1.7533, down 48 points

HO - May $1.6464, down 11 points


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Oil prices jumped in reaction of U.S. fired missiles at Syrian government airbase

April 10, 2017

Recap: Oil futures jumped more than 2% in reaction to the U.S. fired missiles at a Syrian government airbase in overnight trading. Trading was chaotic as May WTI peaked the session at $52.94, but by sunrise on the east coast, the market retraced itself and fell into negative territory, pressured by strength in the dollar. Just as it struggled to maintain earlier gains, oil futures struggled to the downside as well, rising back above unchanged. May WTI settled above $52.24 a barrel, up 54 cents, or 1.04%, while Brent for June delivery gained 35 cents, or 0.64%, to settle at $55.24.

The Dec17/Dec18 WTI spread we had last written about on March 27th, traded at its widest backwardation (front month premium) since February 27th, having peaked on Friday at 82 cents. This puts this spread in range of testing the post OPEC output agreement high of $1.09. A break above $1.09 allows for a run at $1.25, the highest this spread has traded since 2014.

May RBOBrose 1.66 cents, or 1%, to close at $1.7462 a gallon, its highest since August 2015. For the week, gasoline rose 2.5%. May heating oilrose 1.55 cents, or 1%, to $1.6284 a gallon, its highest close since Feb. 27. For the week, heating oil gained 3.4%.

Fundamental News: The Trump administration is developing at least one order aimed at both a new five-year offshore oil and natural gas leasing plan and reversing an Obama administration decision to bar drilling in the majority of the US Arctic waters and a large portion of its Atlantic waters.

Baker Hughes reported that the number of rigs searching for oil in the week ending April 7th increased by 10 to 672.

According to Oil Movements, OPEC’s shipments are expected to fall by 120,000 bpd to 23.9 million bpd in the four weeks ending April 22nd compared with the previous period ending March 25th.

Russia’s Prime Minister, Dmitry Medvedev, said on Friday that US cruise missile strikes on a Syrian airbase were "one step away from clashing with the Russian military."

Russia’s Energy Minister, Alexander Novak, said it was premature to say if the OPEC/non-OPEC agreement to cut production should be extended into the second half of the year. Meanwhile, Russia’s Deputy Energy Minister, Kirill Molodtsov, said the country’s daily oil production was under 1.5 million tons or 10.995 million bpd at the beginning of April.

Russia’s Deputy Prime Minister, Arkady Dvorkovich, said the country’s deal with OPEC to cut production has not delivered as much as the country expected. Russia pledged to cut output to 10.947 million bpd by the end of April, down 300,000 barrels from the record level it had in October.

Crude production data for March indicates that Russia and Kazakhstan are yet to meet their output cut obligations under the OPEC/non-OPEC agreement while Azerbaijan exceeded its promised cut last month. Assuming there is no major shift in production from February, calculations by S&P Global Platts show that the three former Soviet states met their combined obligations by about 73% for March.

Three tankers holding about 1.35 million barrels of gasoline and alkylate are drifting with no instructions for delivery around the Caribbean Isles.

IIR reported that US oil refiners are expected to shut in 940,000 bpd of capacity in the week ending April 7th, increasing available refining capacity by 79,000 bpd from the previous week. IIR expects offline capacity to fall to 763,000 bpd in the week ending April 14th and to 614,000 bpd in the following week.

EarlyMarket Call - as of 9:00 AM EDT

WTI - May $52.81, up 57 cents

RBOB - May $1.7540, up 87 points

HO - May $1.6414, up 1.28 cents


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Oil market posted inside trading day as traders remained cautious on high US crude inventories

April 07, 2017
Recap:The oil market posted an inside trading day on Thursday as traders remained cautious about record high US crude inventories.  The market posted a low of $50.77 on the opening and traded in a 20 cent trading range before the market began its move higher.  The market gradually traded higher throughout the session and posted a high of $51.82 ahead of the close.  May WTI, which failed to test its resistance at its previous high, settled higher for the third consecutive session. It ended the day up 55 cents at $51.70, the highest settlement since March 7th.  The June Brent contract settled up 53 cents at $54.89.  Meanwhile, the product markets also settled in positive territory.  The May RBOB contract settled up 1.43 cents at $1.7296 and the May heating oil contract settled up 94 points at $1.6129.   
 
Fundamental News:  Genscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending April 4th increased by 312,745 barrels on the week but fell by 117,980 barrels from Friday, March 31st to 71,213,050 barrels.
 
Shipping and oil sources said Iran has sold all the oil it had stored for years at sea and the country is now struggling to keep increasing exports as it deals with production constraints. They said Iran had sold its stocks from floating storage in the past two weeks.  Much of the oil stored was condensate.  Prior to the lifting of sanctions, Iran stored unsold oil on ships, which peaked in 2015 at 40 million barrels on around 25 tankers.  The country has up to 60 oil tankers in its fleet.  Iran's drawdown of floating storage gathered pace in September.  By the start of 2017, Iran still held an estimated 16 million barrels of oil on ships.
 
The head of Libya's National Oil Corp, Mustafa Sanalla, defended the organization on Thursday against repeated challenges to its legitimacy, saying it was working for all Libyans rather than any particular faction.  On Thursday, a spokesman for the breakaway NOC in Benghazi said it held an emergency meeting a day earlier to discuss the Tripoli NOC and the transgression it carries out in monopolizing the sale of oil.  He said contracts with international oil companies were protected by the UN.  He said Libya's national output stands at 693,000 bpd and further increases at Sharara could help it increase it to 800,000 bpd by the end of April and to 1.1 million bpd by August. 
 
The EIA reported that US weekly imports of crude from Saudi Arabia, Iraq and Venezuela each fell by more than 20% in the week ending March 31st.  Imports of Saudi crude fell to 888,000 bpd, the first time this year that imports from Saudi Arabia fell below 1 million bpd. 
 
China will import record amounts of oil from West Africa this month as OPEC's supply cuts allow other countries to gain a greater share in the Asian market.  West African producers led by Angola and Nigeria are set to send crude to China at the rate of 1.48 million bpd in April.  Overall Asian imports of West African crude are expected to reach 2.4 million bpd this month. 
China's apparent oil demand increased by 5.3% on the year in the first two months of 2017 to 11.65 million bpd. 
 
Colonial Pipeline is allocating Cycle 22 shipments on Line 2, its main distillate line from Houston, Texas to Greensboro, North Carolina.
 
Gasoline stocks held in independent storage in the Amsterdam-Rotterdam-Antwerp terminal in the week ending April 6th increased by 11.62% on the week but fell by 14.18% on the year to 1.095 million tons.  Gasoil stocks fell by 0.76% on the week and by 6.19% on the year to 3.261 million tons. 
 
Early Market Call - as of 9:00 AM EDT
WTI - May $51.85, up 15 cents
RBOB - May $1.7264, down 33 points
HO - May $1.6171, up 42 points 
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Outage at Buzzard field helped Brent and WTI reach highest level in four weeks

April 06, 2017

Recap: An outage at the 180,000 barrels per day Buzzard field in the North Sea lent early support to oil futures, sending both Brent and WTI to their highest level in four weeks. May WTI came within 12 cents of the $52 a barrel level before paring gains after the release of the EIA inventory report, which reflected an increase of 1.6 million barrels in U.S. crude oil. Expectations were calling for a draw of 400,000.

A brief dip to below unchanged ensued after the release of the EIA report, with May WTI reaching support at $50.85. Failure to penetrate this level, prodded technical buyers into action, bringing this spot contract back above unchanged for the remainder of the session. Both blends posted modest gains, with May WTI settling at $51.15 a barrel, up 12 cents or 0.24%, and June Brent closing at $54.36, up 19 cents, or 0.35%. In post settlement trading, prices dipped after the release of minutes from the Federal Reserve meeting indicated a change in its bond investment policy later this year.

May RBOB fell 0.64 cent, or 0.4%, to end at $1.7153 a gallon, while May heating oil rose 1.12 cents, or 0.7%, to finish at $1.6035 a gallon. 

Fundamental NewsUS lawmakers said a bill to impose new sanctions on Iran has been delayed in the US Senate due to concerns about Iran's May presidential election, in which conservative hardliners hope to defeat moderate President Hassan Rouhani.  A group of Democratic and Republican senators introduced a bill in March seeking to impose tighter US sanctions on Iran over ballistic missile launches and other non-nuclear activities.  However, the Republican chairman of the Senate Foreign Relations Committee, Bob Corker, said the bill would not move forward for now.

Iran's Oil Minister, Bijan Namdar Zanganeh, said he is not worried if India reduces their buying of Iranian oil.

Genscape reported that crude storage in the Amsterdam-Rotterdam-Antwerp region fell by 1.4 million barrels to 54.86 million barrels in the week ending March 31st.

Mexico's Salina Cruz loadings reached 2.22 million barrels in March compared with 3.4 million barrels in February.

According to a study paid for by the American Petroleum Institute, a pending US Customs and Border Protection action to reverse Jones Act exemptions could reduce oil and natural gas production in the Gulf of Mexico by about 500,000 bpd over the next 13 years.  The study claims that if the exemptions are dropped, offshore oil and gas spending in the Gulf will decrease by about $5.4 billion per year between 2017 and 2030 while production will fall by 500,000 bpd over that time period.  

Colonial Pipeline is allocating space for Cycle 21 shipments on Line 20, which carries distillates from Atlanta, Georgia to Nashville, Tennessee.

BMI has cut its 2017 WTI crude average forecast to $53.75/barrel from $55/barrel. 

Barclays said Brent crude is likely to average $58/barrel in the second quarter and $53/barrel in the third quarter.  This is compared with a February forecast of $62/barrel in the second quarter and $56/barrel in the third quarter.

BNP Paribas raised its 2017 Brent crude forecast by $2/barrel to $60/barrel. 

Libya plans to increase the Sharara oil field output to 270,000 bpd in the next few weeks.  Libya's National Oil Corp said it was producing 200,000 bpd on April 4th.

Alaska's Department of Revenue reported that Alaska North Slope crude production in March increased by 2.1% on the month to 565,058 bpd.  It is the largest output since December 2013, when production reached 567,600 bpd. 


Early Market Call - as of 9:00 AM EDT

WTI - May $51.53, up 38 cents

RBOB - May $1.7184, up 32 points

HO - May $1.6135, up 97 points 


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Oil futures hit one month high on expectations that US crude oil inventories decreased

April 05, 2017
Recap: Oil futures reached a one month high on expectations that U.S. crude oil inventories fell as refinery operations increased.  For the first time since March 8th, spot WTI traded and settled above $51 a barrel. May futures tacked on 79 cents, or 1.57%, to settle at $51.03 a barrel. June Brent ended the session at $54.17 a barrel, up $1.05, or 2%.

With WTI posting an outside trading session by the achievement of a lower low, higher high and higher settlement than that of the previous session and, supported by bullish moving oscillators, the momentum of this market has shifted to the upside. Near term support rests at $51.40 and above that at $52.16, the 50-day moving average for the May contract. Support is set at $50.85 and below that at $50.26.

May RBOB rose 1.7%, to $1.7217 a gallon, its highest finish since August 2015, while May heating oil rose 2.89 cents, or 1.9%, to settle at $1.5923 a gallon.

Fundamental News:  According to Bloomberg, crude stocks at Cushing, Oklahoma increased by 300,000 bpd to 68 million barrels in the week ending March 31st.

Reuters reported Tuesday morning that production at the Buzzard oil field in the North Sea was halted for technical repairs.  Normal output should be restored in the coming day or two.  The Buzzard field normally produces 180,000 bpd.

OPEC's progress in reducing the oversupply in global oil markets was aided by cuts in production from Nigeria and Libya in March, two countries that are exempt from OPEC's output cut agreement.  OPEC produced 32.095 million bpd, down 200,000 bpd from February.  Supply from Nigeria and Libya fell by a combined 210,000 bpd to 1.55 million and 620,000 bpd, respectively.  Among the 10 members bound by production caps, compliance weakened to 89% of pledged reductions from 104%.  Saudi Arabia's production totaled 10.01 million bpd in March, increasing its proportion of OPEC output up to 32.13% from 31.4% in February.

Libya's National Oil Corp said production at Libya's Sharara oil field has increased back to 200,000 bpd, nearing the rate it was running at before a recent week-long shutdown.  The NOC said it hopes to increase output from the field to 270,000 bpd in the coming weeks.

In a research note to clients this week, BNP Paribas modestly raised their crude oil price forecast for WTI in 2017 by a dollar to $57.00 a barrel. They also increased their Brent price outlook by $2.00 a barrel to $60.00 per barrel. The bank's analysts left unchanged their price call for 2018 with WTI averaging $61.00 per barrel and Brent posting an average price of $63.00 per barrel.

Colonial Pipeline announced it is allocating space for Cycle 21 shipments on Line 1, its main gasoline line.

Genscape observed what appeared to be power consumption at the Story, Iowa pumping station on Energy Transfer Partners' 470,000 bpd Dakota Access Pipeline starting on March 26th.  The increased power consumption likely indicates that oil has started flowing through the pipeline.  Dakota Access is currently commissioning the pipeline and is preparing to place it into full service.

About 1 million tons of diesel are expected to arrive in Europe in April from the US Gulf Coast.

According to IHS, crude and refined product shipments from the US Gulf fell to 3.1 million metric tons on 75 ships in the week ending March 30th.  It is down 27% from the previous week's 4.26 million metric tons on 104 ships. 


Early Market Call - as of 9:00 AM EDT
WTI - May $51.70, up 67 cents
RBOB - May $1.7317, up 97 points

Oil prices fell after lifting of force majeure at Libya's Sharara oil field

April 04, 2017

Recap: Oil futures edged higher in overnight trading on economically promising data out of Asia, only to succumb to pressure from the lifting of force majeure at Libya's Sharara oil field. May WTI fell 48 cents, to a low of $50.12 before recouping some of its losses. WTI traded in a narrow range of 71 cents, under a lightly traded market. This spot contract settled at $50.24, down 36 cents, or 0.71%. Brent for June delivery slipped 50 cents, or 0.52%, prior to a settlement of $5312 a barrel.

May RBOB fell 0.93 cent, or 0.6%, to close at $1.6937 a gallon and May heating oil slipped 1.12 cents, or 0.7%, to $1.5634 a gallon.

Fundamental NewsGenscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending March 31st increased by 762,430 barrels from Friday, March 24th and by 430,725 barrels from Tuesday, March 28th to 71,331,030 barrels.

OPEC Secretary General, Mohammed Barkindo, said crude stocks are starting to decline in a sign that the production cuts implemented this year are bringing the market to balance.  Separately, he stated that Iraq assured OPEC it will fully comply with an agreement to cut oil production in order to increase crude prices.  Iraq's Oil Minister, Jabar al-Luaibi, said the country's compliance stands at 98%.  He said he was satisfied with the existing deal, but declined to say whether Iraq would support an extension.  Iraq's Oil Minister also said the country's exports from southern ports in April are expected to total 3.2 million bpd, unchanged on the month.  

Iran's Oil Ministry reported that the country's combined exports of crude oil and gas condensate reached a record 3.05 million bpd by March 20th, the end of the Iranian month of Esfand.  Its crude oil exports totaled 2.265 million bpd and its gas condensate exports totaled 785,000 bpd.  

Colonial Pipeline is allocating Cycle 21 shipments on Line 2, its main distillate line from Houston, Texas to Greensboro, North Carolina.

Nigerian oil tanker drivers will go on strike starting April 3rd over low wages and poor roads.  A regional chairman for NUPENG, Cogent Ojobo, said the oil tanker drivers from Nigeria Union of Petroleum and Natural Gas Workers have not set an end date for their strike.

According to Bloomberg, total US waterborne LPG exports from Houston, Port Arthur, Philadelphia and Seattle fell by 25% to 900,161 bpd in the week ending March 30th.  It is down from 1.2 million bpd the previous week.

The Syncrude oil sands project in northern Alberta has cut its production to zero for all of April following a fire last month.

Libya's crude production increased to about 660,000 bpd as its Sharara oil field resumed production on Sunday after a week-long disruption.  Libya's National Oil Corp lifted the force majeure on loadings of Sharara crude from the Zawiya terminal on Monday.  The field was producing about 120,000 bpd on Monday and about 220,000 bpd prior to the March 27th shutdown.  

Goldman Sachs reported that US crude oil output may increase by 60,000 bpd on the year on average in 2017.

Russia's oil output was 11.05 million bpd in March, down 200,000 bpd from October. 


Early Market Call - as of 9:00 AM EDT

WTI - May $50.51 up 27 cents

RBOB - May $1.7044 up 1.07 cents

HO - May $1.5779 up 1.45 cents


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Brent prices moved lower on last trading day for May Brent

April 03, 2017

Recap: Oil futures traded in a disconnected fashion on Friday, as WTI moved higher and Brent moved lower on the last trading day for May Brent. Capping WTI's higher move, was another rise in the U.S. rig count, which increased by 10 to 662. The May contract settled at $50.60 a barrel, up 25 cents or 0.50%, while Brent for May delivery went off the board trading at $52.83 a barrel, down 13 cents or 0.25%. For the quarter, prices lost 5.8%, based upon the most active contract's settlement on Dec.3.

April RBOB rose 1.9 cent, or 1.1%, to $1.700 a gallon, ending more than 2% higher for the quarter, based on the front months. April heating oil rose 1.5 cents, or 1%, to $1.574 a gallon-for a quarterly loss of around 7.6%.

Fundamental NewsBaker Hughes reported that US drillers added oil rigs for the 11th consecutive week.  The oil rig count was increased by 10 to 662 rigs in the latest week.

Oil Movements reported that OPEC's oil shipments are expected to fall by 80,000 bpd to 23.99 million bpd in the four weeks ending April 15th, compared with the same period ending March 18th.

Venezuela's President, Nicolas Maduro, said the country supports extending OPEC's production cuts.  He stated after meeting with Saudi Arabia's ambassador, Jamal Ibrahim Nasef, that there is a historic alliance with Saudi Arabia for oil price stability in the energy world.

The Nigerian subsidiary of Royal Dutch Shell Plc shut down the Nembe Creek Trunk Line, which exports Bonny Light crude, in order to remove theft points.

Marathon expects to restart its 1.2 million bpd Capline pipeline by April 1st following the completion of repairs.

India's Essar Oil more than doubled its oil imports from Iran in February compared with the previous month.  Essar shipped about 246,600 bpd of oil from Iran in February, compared with about 118,000 bpd a year ago.

China's largest crude importer, Sinopec, aims to ship more cargoes from Brazil, the US, and Canada to help ensure stable crude supplies as the Middle East increases refining capacity and Africa suffers disruptions.  Shipments from the Americas reached a record high in March, increasing the region's share of the Chinese market by 1.1% in the first quarter to close to 14%.  China's crude imports from the Americas, led by Brazil, Venezuela and Colombia, reached 5.61 million tons or 1.3 million bpd in March.  China is on track to overtake the US as the world's largest oil consumer this year.

Oil production in West Texas is expected to surpass pipeline capacity.  According to an oil analyst with Bloomberg Intelligence, Permian crude output is expected to increase to 2.65 million bpd in December.  In comparison, takeaway capacity in the region is expected to reach 2.54 million bpd by the end of the year.  Pipeline operators are seeking to increase capacity on existing lines to meet the increased output.  Enterprise Products Partners is expected to start up a new Midland to Sealy, Texas pipeline in the fourth quarter.  However, its full capacity of 450,000 bpd is not expected to be available until early 2018.

IIR reported that US oil refiners are expected to shut in about 984,000 bpd of capacity in the week ending March 31st, increasing available refining capacity by 390,000 bpd from the previous week.  IIR expects offline capacity to fall to 496,000 bpd in the week ending April 7th and 641,000 bpd the following week. 


Early Market Call - as of 9:00 AM EDT

WTI - May $50.76, up 16 cents

RBOB - Apr $1.7139, up 1.05 cents

HO - Apr $1.5850, up 1.05 cents 


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Oil prices moved higher for third straight day and hit highest level in three weeks

March 31, 2017

Recap: Oil futures continued to move higher on Thursday, after the Kuwaiti oil minister stated that his country was in support of extending the current agreement to cut output. Thursday's higher move marked the third straight day of higher prices, and the highest level oil reached in 3 weeks. May WTI topped the session at $50.47 before slightly paring gains. This spot contract settled at $50.35, up 84 cents or 1.70%. May Brent, which expires tomorrow, tacked on 54 cents, or 1.03%, to settle at $52.96.

The front month spread for WTI narrowed to its tightest level in over a month, gaining on inventory drawdowns, pipeline outages, and seasonal maintenance. The May/June spread narrowed to as much as negative 40 cents a barrel.    

April gasoline finished up by almost a penny, or 0.6%, to $1.681 a gallon, while April heating oil gained 1.6 cents, or 1%, to $1.558 a gallon. The April contracts expire at the end of Friday's session.

Fundamental NewsGenscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending March 28th increased by 670,519 barrels on the week and by 331,705 barrels from Friday, March 24th to 70,900,305 barrels.

The IEA's Executive Director, Fatih Birol, said the agency does not expect a major increase in global oil prices despite efforts by OPEC and non-OPEC members to reduce output.  

Kuwait's Oil Minister, Essam al-Marzouq, said his country is among other countries supporting an extension of the OPEC and non-OPEC production cut agreement.

A Reuters survey showed that OPEC oil output fell for a third consecutive month in March and members have now complied with 95% of their commitments under the deal.

Russia's Energy Minister, Alexander Novak, said that Russia cut its oil production by 200,000 bpd in March in accordance with the agreement with OPEC and non-OPEC states.

According to Eurasia Group, it is highly unlikely that Russia will achieve an absolute 300,000 bpd reduction during the tenure of the current agreement.

According to cargo-tracking company, Kpler, OPEC's oil exports fell further this month as several countries not bound by the group's output cut agreement cut shipments.  Iran led the declines with a decline in exports of 416,000 bpd to 2.185 million bpd.  Total OPEC exports in March fell by 1.18 million bpd from the previous month to 24.4 million bpd.  

Iraq's SOMO said the country's oil production averaged 4.464 million bpd so far in March, down 300,000 bpd on levels before OPEC cuts were implemented from January 1st.  Crude exports averaged 3.756 million bpd so far in March, down from 3.869 million bpd in February.

Libya's oil production is expected to fall to about 500,000 bpd due to the shutdown of pipelines from its largest field.

About 1 million tons of diesel are expected to be imported in April from the US Gulf Coast to Europe and the Mediterranean as US refineries return from maintenance.

Gasoline stocks at independently held storage in the Amsterdam-Rotterdam-Antwerp terminal in the week ending March 30th increased by 10.35% on the week but fell by 14.1% on the year to 981,000 tons.  Gasoil stocks increased by 8.27% on the week but fell by 6.73% on the year to 3.286 million tons while fuel oil stocks increased by 3.14% on the week and by 42.53% on the year to 1.545 million tons. 


Early Market Call - as of 9:00 AM EDT

WTI - May $50.27, down 8 cents

RBOB - Apr $1.6824, up 12 points

HO - Apr $1.5611, up 22 points 


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Continued supply disruptions in Libya pushed oil futures to highest level in two weeks

March 30, 2017

RecapOil futures rose to their highest level in almost two weeks, supported by a smaller than expected build in U.S. crude oil inventories, continued supply disruptions in Libya and a strong possibility that the agreed upon output cuts by OPEC and several non-OPEC members would be extended. May WTI settled at $49.51 a barrel, up $1.14, or 2.36%, its highest settlement since March 16. Brent for May delivery tacked on $1.09, or 2.12%, to settle at $52.42 a barrel.

From a technical perspective, May WTI broke and settled through the 10 and 200-day moving averages. These two averages have been playing key roles in this market and the breaking above them puts additional up moves on the chart. The near term objective is $50.11 and through this level, $50.84. Should WTI break above $50.84, there is a good possibility that we could see moves toward the $53 area.  The aforementioned moving averages now provide levels of support for this market. These levels are $48.72, the 200-day average and $48.39, the 10 day average.

April RBOB gained 3.7 cents, or 2.3%, to $1.672 a gallon, while April heating oil rose 2.6 cents, or 1.7%, to $1.543 a gallon.

Fundamental News:  Marathon Petroleum reported Wednesday afternoon it had shut its 1.2 million b/d Capline pipeline on Tuesday as a precaution, after discovering what it called an anomaly on the line in Louisiana. While repairs were underway, no restart date was given. The line moves crude oil from St. James, Louisiana to Patoka, Illinois.

A Reuters survey estimates OPEC oil output is likely to fall for a third straight month in March as the UAE made progress in reducing its output levels coupled with maintenance work and political unrest which cut supplies from Nigeria and Libya. The Reuters survey estimated OPEC compliance at 95%, up 1% from February levels. The Reuters survey also estimated Saudi output rose slightly in March from a large reduction recorded in February. Even with the slight bump in production levels in March, Saudi production cut in March would be 564,000 b/d, well above its pledged cut of 486,000 b/d.

Genscape reported that crude oil inventories in the ARA region fell by 3.2 million barrels in the week ending March 24th to 56.29 million barrels.

Rystad Energy reported that this week's decision by the Saudi government to cut Aramco's tax burden to 50% from 85% has increased the corporate valuation by 250%, from $400 billion to $1.4 trillion. By drastically reducing the tax rate, more cash will go to the potential owners of Saudi Aramco compared to the Saudi government.

The 238,000 b/d crude distillation unit at Phillips 66 Bayway refinery reportedly returned to service late on Tuesday evening. The unit had been shut since February 8th for planned maintenance work.

A union official at PDVSA's Puerto la Cruz refinery reported Tuesday evening that the company had restarted its catalytic cracker at the 187,000 b/d refinery earlier this week as operators are trying to improve gasoline output to relieve local gasoline shortages. The unit was closed last year due to technical problems with a compressor. Union officials said that a damaged compressor was still keeping it from working at full capacity.


Early Market Call - as of 9:00 AM EDT

WTI - May $49.90, up 39 cents 

RBOB - Apr $1.6855, up 1.29 cents 

HO - Apr $1.5510, up 85 points  


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