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Market Intel Archives

Oil markets reverse and move down, but March ULSD (HO) moves up

February 26, 2014

Recap: Yesterday, oil markets played out the reverse of Monday's trading: the entire complex moved lower EXCEPT the lone March NYMEX ULSD (HO) contract that moved up 1.71 cents, unfortunately expanding the backwardation to 6.97 cents. The broader trigger for oil markets moving down were indicators that the world's 2 largest economies, the United States and China, are displaying slower growth. Yesterday was the 6th consecutive day of weakening for the Chinese yuan currency, a 7% drop in the Chinese equivalent of the S&P 500, the CSI 300 Index (Chinese capitalization-weighted Shanghai and Shenzhen stock exchange index), and the U.S. Consumer Confidence Index falling to 78.1 (expectations were 80.0) from a downward January revision of 79.4. ICE Brent moved lower $1.13 to settle at 109.51 and NYMEX Crude moved lower 99 cents to close at 101.83. NYMEX RBOB moved down 3.55 cents to 2.7981, while the March NYMEX ULSD (HO) contract finished up 1.71 cents to 3.1043, but the April ULSD contract moved down 1.55 cents to 3.0346. The difference between these two contracts (3.1043-3.0346) represents a 6.97 cent backwardation. 

Why was the March ULSD (HO) contract the only one that went up when all of the other ULSD contracts went down?  It's that backwardation issue that I have mentioned quite a bit. When there is a backwardation, that is supposed to be the market’s way of saying “we are worried about tight supplies.”  In January, when we saw the building backwardation as we approached the end of the month and the expiration of the futures contract, this situation was confirmed in the cash markets in NY Harbor where we saw basis blowouts. This time around, however, in February, we are not seeing the cash markets go up. In fact, for the past week, they have been flat to lower. So, my theory? Perhaps the option expiry yesterday of the March ULSD (HO) created some additional volatility (the futures expiry is on Friday.)  However, is it possible some trader was short and was getting squeezed as the market went up on the March contract? Unfortunately, this type of activity does have pricing implications for those in the physical markets, and at this juncture, it is my best guess. 

Currently, the oil complex is up ahead of the release of the EIA's weekly DOE Inventory Report at 10:30 am this morning. March NYMEX ULSD is back up, 1.73 cents to 3.1210, NYMEX RBOB is up 14 points to 2.7995, NYMEX Crude is up 55 cents to 102.38, and ICE Brent up 2 cents to 109.53. 

DOE Inventory Estimates: CitiFutures is expecting the following increase (build) or decrease (draw) ranges for the following: .5 to 1.5 MMb build for crude stocks, .5 to 1.5 MMb draw for gasoline,  and a 1 to 2 MMb draw for distillates, and a 1/2 percentage point increase in refinery % operable utilization to 87.3%.  Bloomberg comes in with a crude build at 1.28MMb, a 1 MMb draw in gasoline, and a  1.25 MMb draw in distillate stocks. The 5 year average for this period is a 1.5 MMb build for crude, a 1.9 MMb draw for gasoline, and a .1 MMb decline in distillates. The API reported yesterday afternoon that crude stocks built .8 MMbs, gasoline stocks declined .3 MMb, and a  distillate stock decline of .7 MMbs.

Click here to view today's Refined Products MarketWatch.

Oil markets up yesterday except March NYMEX ULSD (HO)

February 25, 2014

Recap:  The entire oil complex moved higher yesterday EXCEPT the lone March NYMEX ULSD (HO) contract that moved down 1.2 cents as the result of the previous 6.03 cent March - April backwardation coming down to 3.71 cents upon yesterday's close. Unlike last month, 4 days before the expiration NYMEX ULSD contract, the backwardation was a whopping 12.57 cents (and continued higher on the January 31, 2014 expiration to 28.23 cents). We certainly would prefer this backwardation to keep moving down as we come to the expiration of the ULSD futures contract this Friday (RBOB expires as well).  March NYMEX ULSD (HO) closed down 1.2 cents to settle at 3.0872, while the April ULSD contract moved up 1.12 cents to close at 3.0501.  

Yesterday, it was ICE Brent Crude that led the complex up 79 cents to close at 110.64.  Disruption of Libyan output continues to support the international crude benchmark. Libyan crude production has dropped to 231,000 bpd from 375,000 due to the closure of the Sharara oil field forced by protestors.  Last week, NYMEX (WTI) Crude led the complex higher, and it continued its move up yesterday as well: a 5th trading session to close above $102. NYMEX Crude settled up 62 cents to close at 102.82. With the uptick of refinery turnarounds, total U.S. crude stocks should build, and could pressure WTI crude prices down; however, the markets will continue to watch the impact of declining stocks in Cushing, OK. With the on-going tightness in distillates along with gasoline moving into its transportation season, these factors lend continued support to the complex, again, making the results of this Wednesday's weekly DOE Inventory Report critical to market reaction. Physical cash markets are holding steady with NYH basis to the NYMEX for heating oil a penny lower than last week, and ULSD down 1.25 cents from a week ago.  

Currently,  the oil complex is down across the board: NYMEX ULSD is down 97 points to 3.0775, NYMEX RBOB is down 33 points to 2.8303, NYMEX Crude is down $1.19 to 101.63, and ICE Brent is down 50 cents to 110.14. 

Spec ("Speculator") Watch:  As mentioned in MarketWatch yesterday, the price-volume-open interest relationship can provide some insight as to the flow of money (open interest) into the futures market, whereas volume measures the intensity or pressure behind a price move, or potential trend. We can look at these items as "leading" indicators, and then confirm this flow of money by looking at the CFTC's Commitments of Traders Report as a "lagging" indicator. Recall, that when the CFTC reports their data on Friday, it is already lagging as the data is "current" through the previous Tuesday. So today, this data we are reporting on is already one week old. With that said, the report does confirm the increased exuberance by speculators, or  "Money Managers," as net length increased across all petroleum commodities, and per Tim Evans of CitiFutures in his daily Market Overview, "The buying was the equivalent of 73.3 MMbs of oil or 10.47 Million barrels per day, and marked an increase of 13% in the category's overall net long exposure."  To break down the details, for NYMEX Crude, money managers are now net long 331,857 futures and options contracts, or the highest since July 2013. The average settlement price in July 2013 for NYMEX Crude was 108.19. For NYMEX ULSD (HO), speculators held a net long position of 34,593 contracts, an increase of 5,517 contracts, or 16%! Lastly, speculators are starting to move into NYMEX RBOB with a fresh net long position of 40,351, or an increase of 36.5%.  

Why is this important? As we have said before, when there are more players in the market who will benefit with markets moving in one direction or another, those who need to take physical delivery cannot ignore where the price momentum will naturally go: Up for net long and down for net short.

Click here to view today's Refined Products MarketWatch.

Oil markets retreat with biggest drop on NYMEX ULSD (HO), more cold on the way

February 24, 2014

Recap:  Oil markets retreated on Friday, with NYMEX ULSD (HO) dropping the most, 7.85 cents to 3.0992. A significant part of the drop was in the March contract (set to expire this Friday) where 3.40 cents of the March-April backwardation dropped down to 6.03 cents upon the close (see orange box to right after clicking this link.) We could be seeing some profit taking ahead of this week's expiration, particularly after the significant 10 cent move up from the previous week, and the seasonal switch from winter grade to summer grade diesel on the Colonial pipeline in mid-March on Cycle 15. In any event, it was a nice dip and opportunity for retailers and end-users for this upcoming colder than normal forecast for the Northeast (see the HDD forecast below.) NYMEX RBOB (Gasoline) also expires this Friday and closed down 1.33 cents to 2.8333. NYMEX Crude moved lower 55 cents, but maintained its position of closing above $102 for 5 straight sessions to 102.20. ICE Brent moved lower 45 cents to 109.85, leaving the Brent-WTI spread at one its lowest points since October 2013, to $7.65. Currently, NYMEX ULSD is up 1.78 cents to 3.1140, RBOB is down 51 points to 2.8282, NYMEX Crude is up 23 cents to 102.43 and ICE Brent is down 15 cents to 109.70. Markets will look to the EIA's weekly DOE Inventory Report to be released at the regular time this Wednesday at 10:30am for more direction.

Technically Speaking: Price, Volume and Open Interest:  In the absence of fundamental news (not that we are lacking any here, ie. cold temperatures), technical analysis can provide some additional insights. Interestingly, if we look at the price, volume and open interest, we may get some leading information about price action and an impending market trend change.  First, from Tradingcharts.com, "volume represents the total amount of trading activity or contracts that have changed hands in a given commodity for a single trading day, " and open interest "is the total number of outstanding contracts that are held by market participants at the end of each day. Where volume measures the pressure or intensity behind a price trend, open interest measures the flow of money into the futures market." Tradingcharts.com shows the relationship in their chart that can be seen by clicking here.

For example, on the March NYMEX ULSD contract, since last Wednesday, February 19th, both volume and open interest have been dropping from volume of 57,768 and open interest of 55432 on Feb 19th down on Friday, February 21st to, respectively,  38,891 volume and 38,005 open interest.  This volume and open interest reduction for the end of last week on the March NYMEX ULSD contract might indicate part of the reversal in the price action on Friday. Again, as we try and make "sense" of many trading factors that are out of our control, this information can help guide the best possible decision at a specific point in time for end users trying to manage their supply needs. And a case in point was a dip in the oil markets that provided a short term buying opportunity for many heating oil retailers last Friday, as winter is still not over!

Heating Degree Day (HDD) Forecast: Fax-Alert Weather Service has forecasted heating degree day (HDD) % of normal in its Ten Day Temperature Guidance report for the period  February 21st-March 2nd for the following Northeast locations. (HDD percentages above 100% indicate percentage increase of HDDs above colder than normal temperatures.) 

New York:  NYC 107%, Binghamton 112%, Albany 109%, Newburgh 108%

New Jersey:  Newark 106%, Trenton 103%

Pennsylvania:  Philly  108%

Massachusetts:  Boston 107%, Worcester 109%, Chicopee 120%, Hyannis 103%

Connecticut: Hartford 106%, Bridgeport 110%, New Haven 108%

NH: Manchester 106%, Portsmouth 110%, Lebanon 107%, Concord, 110%

Maine: Portland 110%, Augusta 106%, Bangor 110%

Vermont: Burlington 112%, Rutland 108%

Rhode Island:  Providence 104%

Click here to view today's Refined Products MarketWatch

Oil markets down, up, and mixed upon inventory data yesterday

February 21, 2014

Recap: Oil markets ran the gamut yesterday, initially opening mixed, and then after the EIA released its weekly DOE Inventory Report at 11 AM and expectations came in with smaller than expected draws for distillates and gasoline, and in line for an increase in commercial crude oil stocks, the entire complex moved lower. But as the 2:30 pm close of the NYMEX floor approached, the products quickly moved up with NYMEX ULSD (HO) closing up 3.09 cents, expanding the March-April backwardation to 9.43 cents from 7.42 cents the previous day. NYMEX RBOB (Gasoline) climbed up with ULSD to 2.8466, up 2.19 cents. The March NYMEX Crude contract expired yesterday at 102.92, down 39 cents, while the incoming April NYMEX Crude contract settled at 102.75. ICE Brent also finished down, 17 cents to settle at 110.30. Currently, oil markets are down across the board (locking in profits from yesterday?). NYMEX ULSD is down 1.52 cents to 3.1625, NYMEX RBOB is down 1.46 cents to 2.8320, NYMEX Crude is down 26 cents to 102.49, along with ICE Brent down 22 cents to 110.08.

DOE Inventory Report Highlights: Commercial crude stocks increased 1 Million barrels (MMbs), in line with expectations. Gasoline stocks increased .3 MMbs, although estimates were looking for a draw of .7MMbs. Distillate stocks drew only .3MMbs upon expectations of a much larger draw at 2 MMbs. This report could have been viewed bearishly, but as mentioned earlier, with products rallying up at the close, it would suggest that this already tight product landscape and heating demand forecasts for a cold end to February and start to March in the Northeast, the market is bullish for products. Luckily, refinery operational utilization % did not drop as much as expected, down only .3 percentage points to 86.8%. The DOE Inventory Report did reveal that total US distillate stocks are down 8.8% and PADD 1 (East Coast) is down 24%. However, this report improved from last week's annual deficits of 10% and 27%, respectively. PADD 1A (New England) distillates are 8.3% higher at this time compared to last year. And digging into the distillate numbers a little more, distillate imports increased week over week from 269 MMbs to 329 MMbs, a 22% increase. Additionally, distillate demand was down 1.4% from last week's report and down 5% from the same period last year. Gasoline stocks are 1.3% higher than last year.

Backwardation rising again this month: The backwardation we are seeing here in February, versus the one we saw in January, is on a different landscape. Last month, at this same time, one week before the expiration of the contract, the physical heating oil and ULSD cash markets in New York Harbor were moving up as well with the market, effectively "confirming" the market's fears. However, now in February, one week before the contract's expiration, physical cash markets don't seem as concerned this time around, with heating oil actually moving down 75 points and ULSD moving down 25 points. Are physical markets "satisfied" with how to manage tighter supplies than the perceptions of the futures market? Again, we will have to keep a close eye on this issue. Have a great weekend!

Click here to view today's Refined Products MarketWatch.

Oil markets mixed, with March NYMEX ULSD strong - building a backwardation

February 20, 2014

Recap:  Oil markets were mixed yesterday, with NYMEX ULSD (HO) charging up 4.51 cents to settle at 3.1468. NYMEX (WTI) Crude continued its momentum up 88 cents, settling at 103.31. With the late holiday release of the DOE Inventory Report this morning at 11 AM mixed in with weather reports of a colder than normal start to March and the expiration of the March NYMEX Crude contract today, these factors most likely contributed to the upward momentum on these contracts. NYMEX RBOB finished down 76 points yesterday to 2.8247 while ICE Brent Crude closed almost unchanged at 1 cent higher at 110.47. On another note, NYMEX Natural Gas wildly rallied closing up 59.8 cents to close at 6.149. When natural gas prices go up, as we have seen this season, those utilities and large industrials that can convert back to heating oils do so, creating more distillate demand, leading to tighter inventories that will be reflected in the physical (cash) markets. 

Currently, oil markets have all retreated, perhaps some short covering ahead of the inventory report. NYMEX ULSD is down 1.82 cents to 3.1286, NYMEX RBOB is down 3.27 cents to 2.7920, NYMEX Crude is down 40 cents to 102.91, and ICE Brent is down 85 cents to 109.62. 

DOE Inventory Estimates: CitiFutures is expecting the following increase (build) or decrease (draw) ranges for the following: 1 to 2MMb build for crude stocks, .5 to 1.5 MMb draw for gasoline,  and a 2 to 3 MMb draw for distillates, and a 1/2 percentage point decrease in refinery % operable utilization to 86.6%.  Bloomberg comes in on the higher end for crude at a 2 MMb build, .7 MMb draw in gasoline, and a 2 MMb draw in distillate stocks. The 5 year average for this period is a 1.6 MMb build for crude, a .1 MMb build for gasoline, but a 2.4 MMb decline in distillates. The API reported yesterday afternoon that crude stocks declined .5 MMbs, gasoline stocks increased 1.4 MMb, but distillate stocks declined .7 MMbs. 

Déjà vu times 2:  Sometimes a chart does a better job illustrating some repeat patterns. The first Déjà vu chart, (click to see and look) below to the left, is the NYMEX WTI Crude chart showing a similar mid-month rally in January, and now here in February. And (click to see and look) below right, the NYMEX ULSD (HO) chart shows a similar mid-month rally in January and again, in February! Additionally, the building of the NYMEX ULSD March-April backwardation for the past 5 trading sessions feels similar to January as well. Starting with February 12th's close to yesterday, the backwardation increase progressed this way: 3.06 to 4.09 to 6.16 to 5.65 to 7.42 cents.  Although the backwardation  is looking like where we were in January (meaning the market's worry over tight supplies), NY Harbor cash prices for #2 heating oil, however, went down a 1/2 penny (physical market not as concerned about tight supplies).  This disconnect is different than in January, but with a building backwardation, it can ultimately impact inventory level decisions.  Once again, buckle up! 

Click here to view today's Refined Products MarketWatch.

Oil markets rallied hard, now waiting for DOE inventory numbers tomorrow

February 19, 2014

Recap: Oil markets rallied hard yesterday. Headlines attribute the bulk of the lift to the obvious cold weather, and now added to the mix is better Chinese credit information, supporting more growth in the world's second largest economy. However, it almost feels like the market is pricing in more distillate draws, or perhaps even significant draws prior to the delayed release of the weekly DOE Inventory Report tomorrow morning . March NYMEX Crude led the charge to a high of 102.86 before settling up $2.13 to 102.43, a price point not seen since last October, perhaps some short covering before its expiration tomorrow.  ICE Brent moved up $1.38 to close at 110.46, and could be responding to the decreased production of Libyan crude down to 390,000 barrels per day (bpd) from 600,000 bpd  due to protestors limiting pipeline flows.  

On the products side, NYMEX ULSD (HO) didn't see the lower part of its 3.0734 to 3.1200 trading range yesterday, but backed off its high to settle up 2.35 cents to 3.1017. In a week's time, NYMEX ULSD has increased over 7 cents, while the New York Harbor (NYH) cash price for ULSHO has decreased 3.5 cents and #2 heating oil has dropped 2.25 cents. Yes, we know supplies are tight, but it seems there is a disconnect now between the NYMEX and NYH spot pricing. Could this exuberance be traders returning from a long winter weekend reminded of the snow and cold temperatures? NYMEX RBOB was moved higher by the petroleum complex as well, closing up 2.70 cents to 2.8323.  

Currently, oil markets are mixed with NYMEX ULSD up 38 points to 3.1060 while NYMEX RBOB is down 29 points to 2.8294. NYMEX Crude is up 57 cents to 103.00 while ICE Brent crude is down 6 cents to 110.40. Markets will be looking to the results of the EIA's weekly DOE Inventory Report that will be released tomorrow at 11AM, and for good reason. The EIA chart below shows how far below the 5 year average range for U.S. distillate we are currently: -23%. CitiFutures is expecting a 2 to 3 million distillate draw (pushing that red line down even further ...), but that draw compares to a 2.3 MMb draw last year and a 5 year average draw of 2.4MMb.
Click here to view today's Refined Products MarketWatch.

Oil markets look to remain firm this week

February 18, 2014

Recap: Due to the federal President's Day holiday, markets were closed and the last settlements reflected on this report were from Friday, February 14th. The Northeast is bracing for yet another snowstorm, Winter Storm Rex, after having dealt with 2 last week named respectively, Pax and Quintus. (The naming of snowstorms was implemented last season by The Weather Channel to help with communication of large scale weather events, much like hurricane naming.) The I-95 corridor is now home to many cities in the "50 Inch Club" of snowfall for this 2013-2014 winter season. Per the Weather Channel through February 16th, the following cities have surpassed 50 inches of snow fall: Philadelphia at 55.4 inches (as compared to an average of 15.7), New York City at 55.6 inches (as compared to an average of 17.4) and Boston at 53.5 inches (as compared to 29.4). For those providing heating fuels and those transporting those fuels, the 2013-2014 season is clearly stacking up to be one of the most logistically challenging. While a slight February thaw is on the way for the end of the week, most meteorologists are pegging the remainder of the winter season for the Northeast in the "colder than normal" category. Please stay safe on those roads, and  to all those heating dealers out there: your efforts in keeping us all warm is much appreciated.  

Currently, the oil markets are showing strength across the board with NYMEX Crude now over $101 at 101.07, up 77 cents, ICE Brent up 29 cents to 109.47, NYMEX ULSD (HO) is up 2.05 cents to 3.0987 and NYMEX RBOB (Gasoline) up 2.04 cents to 2.8257.  

Items to consider this week: As the March NYMEX Crude contract expires this Thursday, the April NYMEX Crude contract is ready to move into place, solidly over $100, at $100.79.  This expiry along with the  March NYMEX ULSD and NYMEX RBOB expirations next Friday on February 28th, additional volatility should be expected.  Despite the delayed release of the EIA's weekly DOE Inventory Report on Thursday due to President's Day, the market is already showing its bullish slant, perhaps ready for seasonable draws of distillates (2-3 million draw range). Although RBOB stocks are close to last year, once the March contract expires, the summer grade RVP April contract will back fill. Like ULSD, there is a backwardation between the April and May RBOB contracts, currently at 1.2 cents. This could be an indicator that the market is already concerned about gasoline stocks during refinery turnaround for the next 5-6 weeks and the pent-up travel demand.  

Speculator "Spec" Watch: the CFTC's Commitment of Traders Report was released last Friday, 2/14 for the period through last Tuesday, 2/11. Although this is a lagging report, we see that there is increasing speculative momentum with NYMEX ULSD. The net long position of Wall Street "Money Managers" is 29,076 (futures and options), or 49.5% higher than the 10 week average, or the highest net long position since September 17, 2013. As for NYMEX Crude, Wall Street now has a net long position of 306,021 (futures and options), again, the most since last August 27th. When a contract is slanted net long, money is made when the market goes up, not down. So, here we have another reason why oil prices will stay supported. Until we see some significantly warmer weather to motivate these speculators out and to build distillate stocks, oil markets look firm.

Click here to view today's Refined Products MarketWatch.

5 Reasons why oil markets, particularly the products, will stay supported

February 17, 2014

Recap: The oil markets behaved like there was an upcoming 3-day winter weekend last Friday with petroleum products all increasing except the March NYMEX Crude contract losing only 5 cents to settle at 100.30, still above the psychological $100 mark. The April NYMEX Crude contract finished up 8 cents to settle at 100.13. The March contract is set to expire this Thursday, February 20th, and with Friday's volume up on the contract, and a decreasing open interest indicates traders are squaring their positions and moving into the next contract, April. Expect additional volatility on lower volume on Globex, electronic trading today and for the rest of the week with the March contract expiry this Friday. ICE Brent Crude, the international crude benchmark, finished up solidly 56 cents to close at 109.08, closer to that contract's psychological $110 resistance mark.  The contract has been supported by better than expected Euro Zone GDP for the 4th quarter, weaker U.S. dollar, and Libyan refinery outages. 

On the products side, NYMEX ULSD (HO) gained 4.75 cents to close at 3.0782 while NYMEX RBOB (Gasoline) gained 2.81 cents to close at 2.8053. The March-April backwardation has started to move back in ... to 6.16 cents on Friday, as opposed to last Monday's close at 2.82 cents. For gasoline marketers, the March contract, the last winter grade RVP, will expire on February 28th, and the April contract, with the more expensive summer grade RVP, be prepared for the jump up on that contract. April RBOB closed up 2.41 cents to 2.9722. This represents a 16.69 cent difference to the current, March RBOB contract. 

Currently, today is another federal holiday, and with the NYMEX floor closed (Sprague Real Time is open until 1pm, (forwards until noon) on a holiday schedule), again, light volume sometimes means additional volatility. NYMEX ULSD (HO) is up 1.45 cents to 3.0927, NYMEX RBOB is up 10 points to 2.8063, NYMEX Crude is up 50 cents to 100.80, and ICE Brent is even at 109.08. 

Reasons why oil pricing will stay supported: With a February thaw on its way, heating oil dealers should remain vigilant in managing their supplies and pricing because there seem to be more reasons why pricing will stay up, versus why they will move down. 1) More cold temps are coming. According to Meteorologist John Bagioni of Fax-Alert Weather Service, LLC, in today's Weather trends for the Northern Middle Atlantic, New York, and New England regions, e-mail, "Cold reload now a lock and ensures a cold to occasionally much colder than normal finish to February ...The late week moderation will be a false spring tease and will be very much muted compared to the thaw that developed during mid-January." 2) The NYMEX ULSD (HO) backwardation built last week between the March and April contract- remember this is an indicator of the market's concern over on-going tight supplies. 3) The NYMEX RBOB March to April roll will build more expensive pricing into the contract. 4) The Fed has renewed its concern about the U.S. labor markets and its willingness to continue its policy that has kept interest rates artificially low, and devalued the U.S. dollar, enticing more investors to consider commodity markets with better rates of returns. 5) We have not had any major geo-political headlines that have moved the markets up; these moves have been very fundamental based on colder temperatures and tight product supplies. What happens if we finally get one of "those" supportive oil price headlines?

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Tagged: oil markets

Oil Markets firm as winter weather continues resulting in tight supply

February 14, 2014

Recap: The tight supply issue is not just an East Coast concern, but a longer term, global one. Yesterday, the International Energy Agency (IEA) released its Oil Market Report for February, and as reported by Reuters, "Stronger than expected demand has drained oil inventories to the lowest level since 2008, tightening the market and defying predictions of a glut ..." Additionally the IEA said, "Far from drowning in oil, markets have had to dig deeply into inventories to meet unexpectedly strong demand." In this vein, markets were firm on the day but with March ICE Brent expiring, that contract floated down 6 cents to 108.79, along with NYMEX Crude that fell slightly, 2 cents to 100.35. NYMEX ULSD (HO) settled up 1.82 cents to 3.0307 while NYMEX RBOB (Gasoline) finished up 1.41 cents to 2.7772.   

Currently,  NYMEX ULSD is up 1.39 cents to 3.0446, NYMEX RBOB is down 72 points to 2.7700, NYMEX Crude is down 24 cents to 100.11, and ICE Brent is down 12 cents to 108.40. 

Weekend Planning: Heating Degree Day (HDD) Forecast: Fax-Alert Weather Service has forecasted heating degree day (HDD) % of normal in its Ten Day Temperature Guidance report for the period  February 15th-24th for the following Northeast locations. (HDD percentages below 100% indicate % lower of HDDs below normal.)
New York:  NYC 86%, Binghamton 90%, Albany 89%, Newburgh 88%

New Jersey:  Newark 88%, Trenton 85%

Pennsylvania:  Philly  89%

Massachusetts:  Boston 93%, Worcester 90%, Chicopee 97%, Hyannis 90%

Connecticut: Hartford 92%, Bridgeport 93%, New Haven 94%

NH: Manchester 88%, Portsmouth 91%, Lebanon 92%, Concord, 92%

Maine: Portland 95%, Augusta 93%, Bangor 95%

Vermont: Burlington 88%, Rutland 91%

Rhode Island:  Providence 89%

Seeing Red ("warmer than normal" temps) and White (snow cover) on Valentine's Day! NOAA's 6-10 day temperature outlook (below to left) is looking "warmer than normal" across the East Coast, but it is still February, and snow covers the entire Northeast (see NOAA's snow coverage map below right). Have a restful weekend!                     


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Oil complex up after DOE Inventory Report release, ULSD settles down

February 13, 2014

Recap:  The entire oil complex initially moved upon the 10:30 am release of the EIA's weekly DOE Inventory Report yesterday, with NYMEX RBOB leading the way because expectations for gasoline stocks to build or decline on either side  .5 Million barrels came in with a much larger decline at 1.9 Million barrels. NYMEX RBOB (Gasoline) moved quickly to an intraday high of 2.7977, up 4.5 cents to the previous day's settlement; however, it moved lower as the day progressed to close up 1.05 cents to 2.7631. The move down for RBOB was presumably helped  by yet another large, 2 day East Coast winter snow/ice storm to hit the region this winter, muting transportation demand. Before the initial dust settled concerning the larger than expected gasoline draw, NYMEX ULSD (HO) was dragged higher by RBOB, by about 3 cents before traders digested the details of the distillate products to show that expectations of a 2 to 3 Million barrel draw of distillate stocks did not materialize and came in at a more bearish looking .7 MMbs. NYMEX ULSD finally started to move down at 11:30am and closed down 1.56 cents to 3.0125. Although crude stocks built higher than expected at 3.3 Million barrels, compared to expectations of 2.25 MMbs, NYMEX Crude (WTI) was able to stay above the $100 mark for the entire session, closing up 43 cents to 100.37. ICE Brent finished up 11 cents to close at 108.79, and the March contract will be expiring today. 

Currently, oil markets are all trading lower this morning, with NYMEX ULSD down 19 points to 3.0106, NYMEX RBOB down 2.81 cents, NYMEX crude dropping below the $100 mark to 99.79, and ICE Brent is down 32 cents to 108.47. 

DOE Inventory Highlights: PADD 1 (East Coast) distillates are down 27% over last year, and are down 47% to the 5 year average. Last week, PADD 1A (New England) distillates stocks actually increased, putting stocks at a 2% surplus to last year. However, PADD 1B (Central Atlantic) declined, putting it to a 39% deficit as compared to last year, and PADD 1C (Lower Atlantic) is at annual deficit of 10%. Although total gasoline stocks are sitting even to last year, with the national retail price of conventional gasoline sitting at $3.388 per gallon, 29 cents cheaper than last year, and motorists who must be chomping at the bit to get driving after this tough winter, there is not a lot of gasoline stock to buffer this pent up demand. As we enter refinery turnaround season here, it was surprising to see that average refinery operable utilization rate came in 1 percentage point higher to 87.1%, from 86.1% last week. Last year, the rate was lower at 83.8%. What was not surprising, with the rash of East Coast refinery outages, was that PADD 1 (East Coast) rates were down a full 2.1 percentage points to 75%, from last week's 77.1%. As this number declines and fewer products are refined, we will need to see the import numbers increase if heating demand continues at this season's pace. Although total distillate imports increased per the EIA over last year by a whopping 88%, distillate imports decreased 14% from last week. And to illustrate how important distillate imports are to the East Coast, 98.9% of total distillate imports came into PADD 1(East Coast). The bottom line is that product stocks are still vulnerable; particularly, distillates to heating demand. And that means, basis issues could still prove challenging for the remainder of the season until we see warmer temperatures.

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