Filter Archive Listings

ALL
  • SHOW BY POST TYPE

ALL
  • Product

  • POPULAR TAGS

  • Shipping
  • Winter
  • market
  • prices
  • basis
  • nymex
  • market watch
  • basis price
  • sell-off
  • estimates
  • terminal
  • CT
  • gas
  • cash price
  • cash
  • futures market
  • september
  • october contract
  • October
  • buying
  • selling
  • weather
  • rally
  • market update
  • storage
  • new england
  • price bounce
  • forecasts
  • bull
  • bears
  • bulls
  • hurricane
  • storage report
  • bearish
  • supply availability
  • EIA
  • traders
  • optimistic
  • prices falling
  • futures
  • refined products
  • ULSD
  • gasoline
  • volatility
  • oil
  • iran
  • syria
  • november
  • positive
  • storms
  • government shutdown
  • decrease in demand
  • heating degree days table
  • debt ceiling
  • diesel
  • forecast
  • crude oil
  • trading
  • price
  • energy prices
  • gas prices down
  • crude
  • flat
  • down
  • market report
  • sprague
  • Globex
  • prices down
  • lowest
  • price decline
  • market down
  • futures contract
  • volatile
  • gas up
  • inventory report
  • DOE
  • PADD
  • december
  • settlement price
  • low price
  • rbob
  • prices up
  • gains
  • oil markets
  • doe inventory report
  • markets down
  • cold weather
  • heating oil
  • new england weather
  • markets up
  • demand
  • temperature
  • cold
  • oil market
  • iran deal
  • settlement
  • eia storage report
  • January
  • January 2014
  • ice brent
  • wti
  • heating degree day
  • recap
  • brent
  • keystone xl pipeline
  • transcanada
  • exports
  • up
  • china
  • industrial output
  • news
  • New York
  • chart
  • brent-wti spread
  • tapering
  • lfp
  • unemployment
  • interest rates
  • market movers
  • bullish
  • higher
  • eia report
  • january thaw
  • graph
  • Polar Vortex
  • vortex
  • refined
  • products
  • blog
  • data
  • DOE expectations
  • DOE inventory
  • distillates
  • tight supply
  • HDD
  • inventory
  • backwardation
  • contract expiration
  • moves
  • pricing
  • Ukraine
  • SPR
  • Strategic Petroleum Reserve
  • Venezuela
  • Russia
  • Houston Shipping Channel
  • Sour Crude
  • PMI
  • Houston Ship channel
  • NATO
  • API
  • American Petroleum Institute
  • Crimea
  • Refinery runs
  • HDD planning
  • low sulfur
  • sulfur content
  • MA
  • VT
  • NJ
  • RI
  • sulfur maximum
  • war
  • DOE inventory estimates
  • regular gasoline prices
  • gasoline demand
  • gasoline stocks
  • pent-up demand
  • driving season
  • libya
  • short term energy outlook
  • energy outlook
  • speculative
  • economic sanctions
  • quantitative easing
  • GDP
  • rail safety
  • canada
  • refinery
  • crudemovements
  • regulations
  • Northeast gasoline reserve
  • G-7
  • dependency arc
  • Yellen
  • Fed Chair
  • Nigeria
  • pop and drop
  • The South China Sea
  • oil rig
  • Vietnam
  • crude export ban
  • HO
  • market retreating
  • AAA
  • Memorial Day gas prices
  • travel
  • price movements
  • DOE inventory data
  • gasoline up
  • g-8
  • Putin
  • Cushing
  • Iraq
  • al-qaeda
  • ISIS
  • barrels
  • gallons
  • Islamic
  • Jordan
  • Turkey
  • Saudi Arabia
  • Kuwait
  • condensate
  • lease
  • stabilization unit
  • crude exports
  • net length
  • israel
  • Colombia
  • basis protection
  • imports
  • Bahrain
  • Yemen
  • Egypt
  • Soviet
  • Europe
  • MENA
  • Middle East
  • North Africa
  • geopolitical
  • hot spots
  • geopolitical hot spots
  • Risk
  • spec watch
  • islamic state
  • International Energy Agency
  • Energy Information Administration
  • drilling
  • Bakken
  • Permian
  • Eagle Ford
  • ISIL
  • OPEC
  • PADD 1
  • lower
  • Sweden
  • Ebola
  • US crude oil production
  • Crude oil producers
  • crude oil production
  • oil markets down
  • slide
  • contango
  • carry
  • trading range
  • Swiss Franc
  • Switzerland
  • European Central Bank
  • ECB
  • Euro
  • QE
  • USW
  • United Steel Workers
  • Strike
  • Greece
  • jobs
  • oil prices
  • jobs report
  • VIEW ALL TAGS

Market Intel Archives

Oil markets moving lower

September 10, 2014

Recap: Oil markets were down yesterday except the sole October NYMEX (WTI) Crude futures contract, which settled up 9 cents to $92.75, as the front month is commanding a premium to the November NYMEX Crude contract which settled down 16 cents to $91.89. Leading the complex down was ICE Brent Crude, which moved down $1.04 to settle under $100 at $99.16, and also shrinking the Brent-WTI spread down to $6.41 per barrel. It seems ample global supplies and shrinking demand were validated in the DOE's Short Term Energy Outlook issued yesterday. The DOE revised its 2015 U.S. oil production forecast up by 250,000 per day, with total output reaching levels not seen since the early 1970s. NYMEX (ULSD) HO settled below the $2.80 level, down 1.79 cents to $2.7915, and NYMEX RBOB settled down 1.35 cents to $2.5484.  

Currently, oil markets are mixed with NYMEX ULSD down 88 points to $2.7827, NYMEX RBOB up 18 points to $2.5502, NYMEX Crude down 20 cents to $92.55, and ICE Brent Crude down 5 cents to $99.11. Today markets will be looking for guidance from the EIA's weekly DOE Inventory Report to be released at 10:30 this morning (see estimates below). Also, President Obama will be addressing the nation this evening concerning U.S. involvement in fighting the Islamic State (ISIS). 

DOE Inventory Estimates:  Citi Futures is expecting the following increase (build) or decrease (draw) ranges:  1 to 2 MMb draw range for crude stocks. Bloomberg is expecting a 1.5 MMb decline, and  the 5-year average is a 3.9 MMb draw. For gasoline, Citi Future's is expecting a .5 to 1.5 MMb draw range, Bloomberg is expecting no change, and the 5-year average is a .3 MMb build for this report. For distillates, Citi Futures is expecting a .5  MMb to a 1.5 MMb build range, Bloomberg is expecting a 1 MMb build in inventories, and the 5-year average is a 1.2 MMb build. For refinery runs, Citi Futures is expecting a .5 percentage point decrease in refinery % operable utilization to 92.8%,  Bloomberg is expecting a .25 percentage point decline, and the 5-year average is 88.6%. The American Petroleum Institute (API) reported their results Wednesday afternoon: Crude stocks decreased 1.9 MMbs (with Cushing, OK crude stocks increasing .3 MMbs),  gasoline stocks increased .7 MMbs, and distillate stocks increased 1.7 MMbs. 

Another Reason to Watch East Coast Inventories – Could we see more exports to Europe? Last night, Reuters reported  "The United States should commit to exporting oil and natural gas to Europe under a transatlantic trade deal in light of the European Union's geopolitical situation, the EU trade commissioner said on Tuesday ... 'It is important that we come forward with a position on that (energy agreement) as soon as possible, because maybe you have noticed that some things are going on in Europe,' EU trade chief Karel De Gucht told reporters at a briefing in Washington.'" (Reuters 9-9-14) As pressure mounts for U.S. officials to make "geostrategic" commitments to its European allies, a potential result of this type of commitment could strain already low distillate inventories, particularly on the East Coast. Stay tuned!

MarketWatch will return on Monday, September 15, 2013. Have a great day and upcoming weekend! Click here to view today's Refined Products MarketWatch.

Oil markets moved lower yesterday, can the bears move it lower?

September 09, 2014

Recap: Oil markets moved lower across the board for a third session in a row, and were highlighted momentarily by ICE Brent Crude that dipped below the psychological $100 point to $99.36. ICE Brent Crude managed to settle at $100.20, down 62 cents on the day. We were reminded by Stephen Schork of The Schork Report yesterday about the significance of settling below $100.17. From a technical perspective, this point represents the 2012-2013 Fibonacci 50/62% retracement area, and because we have seen a consistent reduction in net speculative length, we could be seeing more downward momentum if bulls are unable stay above this level. Bulls managed to settle above it yesterday, but just barely. NYMEX (WTI) Crude hit an intraday low of $91.80 before settling higher at $92.66, down 63 cents. The Brent-WTI spread stayed steady at $7.54. NYMEX ULSD (HO) had dropped to a low yesterday of $2.7882, but moved back up, settling at $2.8094, down 98 points. NYMEX RBOB (Gasoline) dropped to an intraday low of $2.5371 yesterday before settling at $2.5619, down 2.15 cents. 

Currently, ICE Brent Crude is back up this morning as reports that  "...Britain's North Sea Buzzard oilfield was shut down again on Monday night, according to trade sources, as it struggles to return from maintenance. Buzzard is the biggest contributor to the Forties crude stream, which helps underpin the price of benchmark dated Brent." (Reuters 9-9-14) October NYMEX (WTI) Crude is at $93.72, up $1.06  versus its November futures contract, which is up 75 cents, indicating the on-going current demand for U.S. crude. The products are up slightly as well, NYMEX ULSD is up a point to $2.8095 while NYMEX RBOB is up 6 points to $2.5625.

Is OPEC concerned over lower crude prices? According to the International Monetary Fund current crude oil prices may be "... comfortable for OPEC's core Gulf members, [as] they are below levels members including Iran, Algeria and Iraq need in 2014 for their fiscal balance to be zero." (Reuters 9-8-14)  However, Arab Petroleum Investments Corp, an oil investment financing arm of OPEC "... puts the break-even level for number one producer Saudi Arabia much closer to current prices at $98.40, and the OPEC weighted average at $104.80." (Reuters 9-8-14). Although OPEC members do not meet until November to review their output figures and policies, and OPEC delegates continue to suggest that they are not worried with this temporary move down, Saudi Arabia did lower its Official Selling Price (OSP) last week. Olivier Jakob, a Petromatrix analyst, believes that at "$90 to $100 a barrel it will be fine, but if you go down to $75 it's another issue. What Saudi Arabia did with the OSPs is significant. I take it as a sign that they want to keep market share  and are not planning to cut exports." (Reuters 9-8-14) This is good news for Europe as the latest sanctions on Russian oil companies could potentially limit Russian exports.

In Europe, Speculators have been reducing their net-long positions, too:   The Intercontinental Exchange (ICE) released its Commitments of Traders Report for reporting through Tuesday, September 2nd.  Tim Evans of Citi Futures reported yesterday that "...fresh short selling outpaced new purchases. Overall, the global petroleum complex features the smallest net-long exposure since June 2012." Net speculative length for the Money Manager (Speculative) category for European benchmark  ICE Brent Crude and ICE Gasoil (heating oil) continue to decline. ICE Brent net speculative length is down to 64,482 futures and options contracts and is 71% lower than a year ago. ICE Gasoil's (heating oil)  net speculative length is down 95% from a year ago at 4,565 futures and options contracts . Although this European data is lagging, it provides confirmation along with the NYMEX oil contracts that speculators are bearish; but, the million dollar question is, for how long?
Click here to view today's Refined Products MarketWatch.

Oil markets lower Friday, and again this morning

September 08, 2014

Recap: Oil markets moved lower across the board Friday underpinned by a weak U.S. nonfarm payroll report that could indicate a U.S. economy that is not as strong as analysts had been expecting. As the Eurozone economies continue to flounder motivating the European Central Bank (ECB) to reduce financing and deposit rates, some analysts are wondering if any robust energy demand can be squeezed out of weak economies around the globe. With strong North American crude production showing no sign of slowing along with potentially weak energy demand across the globe, the fundamental picture looks bearish. Speculators seem to be feeling this undertone as well, as they continue to liquidate long positions across the oil complex. October NYMEX (WTI) Crude settled down $1.16 to $93.29, and  maintained a premium (backwardation) to the January futures contract of $1.01, still indicating strong current demand for U.S. crude oil. October ICE Brent Crude finished down Friday $1.01 to $100.82, but the carry to the January Brent futures contract expanded to $1.60, indicating that there may be more demand, hence the higher future price, for Brent crude come winter. NYMEX RBOB (Gasoline) lost 1.65 cents to settle at $2.5834, but the backwardation between the October and November contracts expanded to 4.43 cents. NYMEX ULSD (HO)  lost 1.71 cents to settle at $2.8192.

Currently, global markets are jittery about another currency as the "sterling fell to a 10-month low while British shares and government bonds showed strains on Monday, as a poll put the campaign for Scotland to split from the rest of the UK in the lead for the first time – just 10 days before the final vote."  (Reuters 9-8-14) As the dollar strengthens against other foreign currencies, Carsten Fritsch, senior oil and commodities analyst for Commerzbank in Frankfurt, believes that "the main factor driving us down has been the strength in the dollar." (Reuters 9-5-14) ICE Brent Crude broke the $100 psychological level overnight, and is hovering around $100.02, down 80 cents, NYMEX Crude is down 78 cents to $92.51, NYMEX ULSD (HO) is down 1 cent to $2.8092, and NYMEX RBOB is down 1.88 cents to $2.5646. Markets are also following the news that the European Union (EU) has "put Russia's top oil producers and pipeline operators Rosneft, Trans neft and Gazprom Neft on its list of Russian state-owned firms that will not be allowed to raise capital or borrow on European markets, an EU diplomat said.” (Reuters 9-8-14)

Speculator "Spec" Watch:  Net Speculative length declined for NYMEX (WTI) Crude and for a second consecutive four-year low for NYMEX RBOB (Gasoline). NYMEX ULSD (HO) expanded a net-short position for a second week: All bearish moves. According to the CFTC's Commitments of Traders Report released on Friday for reporting through Tuesday, September 2th, the Money Manager (Speculative) category for NYMEX (WTI) Crude, net speculative length (combined futures and options contracts), decreased 9.17% from the previous week of 189,753 futures and options to 172,357: an 18-month low.  NYMEX RBOB net speculative length decreased 8% from 19,444 futures and options contracts to 17,900. NYMEX ULSD (HO) is still net short and even more so than the previous reports: now -17,779 more futures and options contracts than the previous week at -12,545 contracts. Speculators are showing their bias to the bearish side.

Click to view today's MarketWatch oil market report in a downloadable format.

Oil markets dropped yesterday, mixed today

September 05, 2014

Recap: Oil markets dropped across the board Thursday after the ECB (European Central Bank) dropped its main refinancing and deposit rates and the release of a DOE Inventory Report that was more or less within market expectations.  Total commercial crude stocks dropped .9 Million barrels (MMbs) on expectations of a 1 MMb decline, total gasoline stocks dropped a little more at 2.3 MMbs on expectations of 1.4 MMbs, and total distillate stocks increased .6 MMb on expectations of a .4 MMb increase. The settlement results yesterday: NYMEX ULSD (HO) down 2.95 cents to $2.8363, NYMEX RBOB (Gasoline) down 2.01 cents to $2.5999, NYMEX (WTI) Crude down $1.09 to $94.45, and ICE Brent Crude down 94 cents to $101.83. The Brent-WTI spread was $7.38, down from the previous week at $7.91. October NYMEX RBOB continues to trade at a premium (backwardation) to November RBOB by 4.32 cents as New York Harbor spot prices continue to fetch about a 25-cent premium over the NYMEX.  Currently, oil markets are mixed, with October NYMEX RBOB trending higher, up 1.57 cents to $2.6156. November NYMEX RBOB is up 1.11 cents to $2.5678, and the backwardation has expanded to 4.78 cents. NYMEX ULSD is down 21 points to $2.8342, NYMEX Crude is down 6 cents to $94.39 and ICE Brent is up 4 cents to $101.87. The U.S. Department of Labor just released August nonfarm payrolls at 8:30am this morning and came in at the smallest gain in 8 months, 142,000 on expectations of 200,000 or more. The unemployment rate moved down from 6.2% to 6.1%, but the important labor participation rate moved down from 62.9% to 62.8%.  

Europe and Quantitative Easing?  ECB President Mario Draghi said in a news conference yesterday that "the ECB would start buying asset backed securities and covered bonds in a further bid to stimulate growth, and that the governing council had discussed the implementation of a program of broad-based asset purchases, known as quantitative easing." (Dow Jones 9-4-14) Sound familiar? As Europe treads down the artificial interest rate path the U.S. is trying to exit from, this new dynamic will impact oil markets. Tim Evans of Citi Futures suggests, "For now, the European Central Bank move is being viewed as a cap on oil prices based on the weaker euro/stronger dollar combination, but ultimately we think it will prove a support for physical demand, if not a full effective stimulus." (9-4-14) 

PADD 1 (East Coast) Distillate Stocks Recap-The Elephant Remains:  Although PADD 1 (East Coast) distillates increased .46 MMbs to 40.25 Million barrels (MMbs), East Coast distillate stocks are 6.6% lower than last year, and 23.1% below the 5-year average (see EIA's PADD 1 Distillate Fuel Oil Stocks chart below). This is the elephant in the room as we enter the heating season. With NY Harbor the pricing location for NYMEX RBOB and ULSD futures contracts, is the ongoing inventory physical weakness, particularly in PADD 1B (Central including NY) and PADD 1A (New England), impacting the futures market?  We definitely saw the impact of tighter spot gasoline stocks in New York Harbor upon the October NYMEX RBOB contract on Wednesday, and today, we have confirmation from the DOE Inventory Report that East Coast refiners reduced their operable utilization by 4.9 percentage points from 87.1% last week to 82.2% this week. Last year, it was 88.0%. PADD 1B distillate stocks are down 12% from last year, but are down 26.2% versus the 5-year average. PADD 1A distillate stocks are down 2% as compared to last year at this time, but are 42.2% lower than the 5-year average. With the heating season upon us and a hurricane season that has yet to end (and luckily has not produced any major hurricanes impacting oil assets so far this season), we will have to continue to watch stock levels closely.
Click here to view today's Refined Products MarketWatch.

Oil markets pop yesterday after Tuesday's drop. A drop today?

September 04, 2014

Recap: Oil markets completely reversed Tuesday's slide yesterday. The leader of the pack Wednesday was NYMEX RBOB (Gasoline) which increased 7.7 cents to 2.6200, a 3.03% increase. The backwardation between RBOB's October and November futures contracts was 4.01 cents, indicating that a premium is being priced into the nearby October contract. Why? News that physical gasoline supplies in  New York Harbor (the location where the NYMEX RBOB futures contract is priced) were anticipated to drop because East Coast refiners had to cut refinery runs due to rail delays of crude oil then triggered New York Harbor spot gasoline up 7.5 cents, and 26.5 cents higher than the October NYMEX RBOB futures contract (Citi Futures 9-3-14). NYMEX RBOB seemed to set the price momentum tone yesterday, and the rest of the complex followed:  NYMEX ULSD (HO) gained 6.91 cents to settle at 2.8658, NYMEX (WTI) Crude settled up $2.66 to $95.54 while ICE Brent Crude gained $2.43 to $102.77.  

Yesterday's pop back up across the oil complex felt very different from the typical drops and pops we have recently observed. Many market analysts pointed to the proposed ceasefire between Russia and Ukraine as aiding Eurozone economics and energy demand as a valid reason for the pop. Even if the world believed Putin was willing to make peace with Ukraine, it is more likely Russian barrels would continue to flow without economic sanctions, a fundamentally strong supply factor, and bearish for prices, not bullish. "’It's a bit counterintuitive' that news of reduced geopolitical tension is pushing oil prices higher, said Jim Ritterbusch, president of energy-advisory firm Ritterbusch & Associates. 'The market's interpretation is that it conjures up images of economic improvement in the eurozone, which is badly needed.'" (Dow Jones 9-3-14) 

Currently, oil markets are down across the board upon news of the European Central Bank (ECB) cutting its main refinancing rate from .15% to .05%, and its deposit rate from -.1% to -.2% ahead of its monthly press conference today. Immediately, the euro currency fell to a 14-month low against the dollar. The ECB made the decision to help stimulate the eurozone as "poor data in recent weeks has repeatedly underscored the sluggishness of the eurozone's economic recovery, fanned recessional fears and heaped pressure on the bank to resort to further stimulus." (Dow Jones 9-4-14) NYMEX ULSD (HO) is down 29 points to $2.8629, NYMEX RBOB is down 4 points to $ 2.6196, NYMEX Crude is down 76 cents to $94.78, and ICE Brent Crude is down 37 cents to $102.40. Oil markets will eagerly await the delayed inventory results to be released at 10:30 AM this morning from the EIA's weekly DOE Inventory Report. 

DOE Inventory Estimates:  Citi Futures is expecting the following increase (build) or decrease (draw) ranges: .5 to 1.5 MMb draw range for crude stocks. Bloomberg is expecting a 1 MMb decline, and  the 5-year average is a 2.1 MMb build. For gasoline, Citi Future's is expecting a 1 to 2 MMb draw range, Bloomberg is expecting a 1.4 MMb draw, and the 5-year average is a 1.9 MMb draw for this report. For distillates, Citi Futures is expecting a .5 MMb draw to a .5 MMb build range, Bloomberg is expecting a 1 MMb draw in inventories, and the 5-year average is a .4 MMb build. For refinery runs, Citi Futures is expecting a .5 percentage point decrease in refinery % operable utilization to 93.0%,  Bloomberg is expecting a .3 percentage point decline, and the 5-year average is 89.3%. The American Petroleum Institute (API) reported their results Wednesday afternoon: Crude stocks decreased .5 MMbs (with Cushing, OK crude stocks decreasing .1 MMbs),  gasoline stocks increased .4 MMbs, and distillate stocks increased .4 MMbs.Click here to view today's Refined Products MarketWatch.

Oil market bears had control yesterday, today the bulls

September 03, 2014

Recap: Oil market bears that left for their last summer holiday last week brought back the slide from the water park yesterday as oil markets slid down through multiple technical supports throughout the day.  The leader of the pack was NYMEX (WTI) Crude, which lost $3.08, or 3.21% to settle at $92.88, perhaps motivated by fall refinery maintenance, which will ease the demand from U.S. refiners in the weeks to come. The backwardation between the October WTI and January contracts stands at $1.26; yesterday's settlement indicates the premium now for crude is still robust, although the backwardation narrowed from $1.58 on Friday's close. We will have to wait until Thursday morning for the EIA to report its delayed weekly DOE Inventory Report due to the Labor Day holiday to confirm the abundance (or not) of crude stocks and demand. 

ICE Brent Crude futures hit a low yesterday of $100.17, before settling at $100.34, down $2.85 or 2.76%. The last time we saw a close around this $100 point was back on May 13, 2013 at $100.39. Gold prices fell to a two-month low yesterday on a stronger U.S. dollar, which also pressured Brent crude lower. Andrey Kryuchenkov of VTB Capital feels that "The market in London may 'take a breather near the key psychological support at $100 in the short run' ... [but] given the geopolitical background lending some support to prices, it is unlikely the market will see any sustained pullback below $100." (Dow Jones 9-3-14) We also  continue to see a carry from the October to January contracts, representing the opposite situation from WTI crude: ample supply and less demand and a cheaper price today, but a more expensive price in the outer months.  The Brent-WTI spread is yet another trend we have been following (Brent Crude minus WTI Crude; hence $100.34 - $92.88 = $7.42). As the spread decreases, it reduces the incentive for U.S. refiners to export the products they are refining. The Brent-WTI spread increased slightly yesterday to $7.42 from $7.23 on Friday. 

On the products side, the same bearish excitement was felt as the new October NYMEX RBOB (Gasoline) contract (now with its winter RVP spec) slid down almost 8 cents to settle at $2.5430, or $3.05%. The last time we saw a price in this area was back on November 6, 2013 at $2.5480. NYMEX ULSD (HO) followed the complex down as well, 6.34 cents or 2.22% to $2.7967. The break below $2.80 yesterday sets up an opportunity to a lower trading range not seen for some time. The last time we saw this number, although very briefly, was on May 31, 2013 when HO settled at $2.7923. 

Currently, oil markets are back in positive territory this morning after yesterday's slide. NYMEX ULSD (HO) is up 2.56 cents to $2.8223, NYMEX RBOB is up 3.39 cents to $2.5769, NYMEX Crude is up $1.01 to $93.89, and ICE Brent Crude is up $1.08 to $101.42. The excruciatingly sad news yet again of another American, Steven Sotloff, being viciously killed at the hands of the Islamic State will play into political conversations that may call for increased military action from the United States. The U.S. has not revealed a strategy for dealing with the Islamic State in the long term. Oil markets could be influenced by the potential of a more militarily involved United States and Europe in a regional conflict that could find its way back to our soil, particularly with the anniversary of 9/11 looming. Oil markets have so far shrugged off the geopolitical premium of the Islamic State and of Russia's interests in Ukraine, but perhaps a geopolitical premium is starting to percolate. Click here to view today's Refined Products MarketWatch.

Oil market bears back from vacation

September 02, 2014

Recap: Oil markets settled Friday all on an up note, as the September NYMEX ULSD (HO) and NYMEX RBOB (Gasoline) futures contracts expired. With lower-than-normal volume, and additional end-of-month volatility to start the long weekend, the bulls managed to push higher with NYMEX (WTI) Crude settling up $1.41 to $95.96 and ICE Brent up 73 cents to $103.19.  September NYMEX RBOB popped up 3 cents to settle at $2.7827 as the summer grade RVP contract went off the board and the incoming October contract settled up 3.21 cents, but is lower at $2.6229. September NYMEX ULSD (HO) settled up 79 points to $2.8569, and the incoming October contract settled up 83 points at $2.8601. Worries over further Russian incursions into Ukraine could have helped oil markets higher as further economic sanctions by the West on Russia could result in "counter" sanctions from Russia. This time, the worry will not be over Russia's sanctions on fruit imports from Europe, but rather their oil exports to Europe. However, the more immediate pop up last Friday could have been on reports that production "rates were cut by nearly one-third after Thursday's explosion and fire" at BP's Whiting refinery in Indiana. (The Schork Report 9-2-14) Currently, with the Labor Day holiday done, summer gasoline demand having reached its peak, and the CFTC reporting on Friday that bullish speculators are harder to find (see below), oil markets are down sharply this morning across the board. NYMEX ULSD is down 3.09 cents to $2.8292, NYMEX RBOB is down 4.22 cents to 2.5807, NYMEX Crude is down $1.05 to $94.91, and ICE Brent is down $1.06 t0 $101.73.

Speculator "Spec" Watch:  Net Speculative length increased minimally for NYMEX (WTI) Crude , declined to a four-year low for NYMEX RBOB (Gasoline), and  NYMEX ULSD (HO) a net-short position expanded 37.6%, a real bearish move. According to the CFTC's Commitments of Traders Report released on Friday for reporting through Tuesday, August 26th, the Money Manager (Speculative) category for NYMEX (WTI) Crude, net speculative length (combined futures and options contracts), increased slightly .6% from the previous week of 188,589 futures and options to 189,753.  NYMEX RBOB net speculative length decreased a whopping 31.6% from 28,431 futures and options contracts to 19,444. NYMEX ULSD (HO) is still net short and even more so than the previous reports: now -12,545 more futures and options contracts than the previous week at -7,828 contracts . With speculators losing their desire to be long and reducing their bets that the market will move up for gasoline, and with ULSD speculators still net short, it looks like the bears are still awake.

Vacation Catch-ups:

1) On Friday, Ukraine requested full membership in NATO, its strongest way of pleading for Western military aid. However, Russian President Putin, "defiant as ever, compared Kiev's drive to regain control of its rebellious eastern cities to the Nazis invasion of the Soviet Union in World War Two." (Reuters 8-29-14) NATO has satellite photographs of Russian artillery columns in Ukraine. 2) Prime Minister David Cameron of Great Britain has raised his country's terrorism threat level to "severe," indicating that an attack in Great Britain was "highly likely." Cameron said on Friday, "What we're facing in Iraq with ISIL (Islamic State) is a greater and deeper threat to our security than we have known before." (Reuters 8-29-14) 3) U.S. consumer sentiment, as measured by the Thomson Reuters - University of Michigan index, rose during August to 82.5 on median economists' expectations of 80.1 and up from 81.8 in July 2014. 4) Brazil, Latin America's largest economy, has fallen into a recession with gross domestic product (GDP) shrinking .6 percent in the 2nd quarter and 1st quarter being revised down .2%.

Click to view today's oil markets Market Watch report including graphs in a downloadable format.

Oil markets mixed yesterday, up this morning ahead of Labor Day weekend

August 29, 2014

Recap: Oil markets were settled mixed yesterday after starting up across the board. NYMEX ULSD (HO) settled down 1.15 cents to $2.8490 but NYMEX RBOB (Gasoline) settled up 68 points to $2.7527. Both September futures contracts will be expiring at the end of today's trading. The crudes finished mixed as well, with NYMEX (WTI) Crude up 67 points to $94.55, while ICE Brent Crude finished down 26 cents to $102.46 and decreasing the Brent-WTI spread down to $7.91. Currently, oil markets are all slightly up across the board: NYMEX ULSD is up 17 cents to $2.8507, NYMEX RBOB up 33 points to $2.7560, NYMEX Crude up 38 cents to $94.93, and ICE Brent up 27 cents to $102.73.  

Keeping in mind factors influencing oil market pricing: The long Labor Day weekend, the expiration of NYMEX ULSD and RBOB futures today, a more active Atlantic Basin of tropical storms, refiner maintenance, and revelations about Islamic State terrorist recruits holding passports for upwards of 50 countries as we approach the anniversary of 9/11 are all valid reasons for increased volatility that could move oil markets higher. But on the other hand, record U.S. production of crude oil, a stronger U.S. economy, weaker oil demand in China, the U.S. Federal Reserve tracking to increase interest rates helping to move investors back into U.S. treasuries and out of commodities, a stronger U.S. dollar, and reduced net speculative length, are all factors keeping a lid on oil prices from going up, and can help push them lower. For today, and through the weekend, rest and enjoy the fruits of your labor with family and friends as we get ready for another heating season. Enjoy!  

Geopolitical Hotspot Update:  As noted recently in MarketWatch, the oil markets have been pricing out many of the geopolitical risks as market participants have interpreted that there would be limited impact to oil supplies.  Russia/Ukraine: Tensions are increasing yet again on reports that Russian forces entered Ukraine to support Russian-backed separatists. Ukrainian President Petro Poroshenko said he was cancelling a trip to Turkey because of the "rapidly deteriorating situation in the eastern Donetsk region." (Reuters 8-28-14) Russia is denying that it has any involvement of either weapons or troops in Ukraine, yet the Russian defense ministry "claimed the patrol had crossed the border by mistake." (Reuters 8-26-14). But other sources paint a very different picture including a NATO military officer, who indicated there are over 1,000 Russian troops in Ukraine. A Ukrainian military spokesperson underscored the absurdity of Russia's innocence comparing it to "paratroopers [getting] lost like Little Red Riding Hood in the forest." (Reuters 8-26-14) Yesterday, U.S. ambassador to Ukraine Geoffrey Pyatt, tweeted the following: "Russian supplied tanks, armored vehicles, artillery and multiple rocket launchers have been insufficient to defeat Ukraine's armed forces. So now an increasing number of Russian troops are intervening directly in fighting on Ukrainian territory." (Reuters 8-28-14) In a televised speech yesterday afternoon, President Obama made it clear that the U.S. would not get involved militarily in this region, but could impose more economic sanctions. 

Iraq/Syria/ISIS (Islamist State): CBS News reported yesterday that a second American died fighting for ISIS in Iraq as reported by "jihadist tweets." The U.S. State Department has not officially confirmed this second death of an American fighting for ISIS, but it has confirmed the death of the first, Douglas McCain, who grew up in Minnesota.  Both of these ISIS terrorists grew up in the Minneapolis area that is "home to the largest population of Somalis outside East Africa ... and has become fertile ground for Islamic terrorist groups looking for recruits." (CBS News 8-28-14) Fox News was reporting Thursday night that upwards of 14,000 ISIS recruits from 50 different countries (300 from the U.S. and 1200 from Great Britain) could pose a threat as these 'foreign' ISIS recruits could re-enter their home countries and set up domestic ISIS terror cells. This information is on the heels of U.S. President Obama now deciding whether or not to expand military airstrikes into Syria and strike ISIS targets while continuing airstrikes against them in Iraq as well. Despite ISIS, Iraq continues to pump 2.6 MMbs of oil per day. 

2014-2015 Winter Temperature Outlook:  Meteorologist John Bagioni of Fax-Alert Weather Service released his winter outlook Thursday, and points to  colder-than-normal winter temperatures for the upcoming heating season (see chart below): "Large-scale atmospheric and oceanic pattern trends continue to suggest the winter season, December 2014 through February 2015, will feature colder- and stormier-than-normal conditions for much of the central and eastern U.S. ... if the El Nino event holds in the weak-to-moderate range and if the north Pacific warm pool hold steady as we move through the mid-fall period, confidence in the cold winter call with increase further."Click here to view today's Refined Products MarketWatch.

Oil markets up across the board ahead of an expected busy Labor Day weekend

August 28, 2014

Recap:  Oil markets were mixed Wednesday after mixed signals upon the release of the weekly DOE inventory data for the period ended August 22, 2014. Although market expectations were essentially confirmed by the DOE data, the market seems to be taking a longer seasonal view as the summer driving season comes to a close after Labor Day, the heating season (and hurricane season) ramps up, and refiners plan to go into seasonal maintenance. For now, another stunning national robust refiner operable utilization average rate of 93.5%, the second highest of the summer, confirmed that refiners have been boiling the midnight oil, as commercial crude oil stocks declined 2.1 MMbs to 360.5 MMbs, but Cushing, OK crude stocks increased .5 MMbs to 20.7 MMbs. October NYMEX (WTI) Crude futures gained only 2 cents to $93.88, but January NYMEX Crude futures closed lower at $92.95, representing a 93-cent backwardation from October to January. Again, further confirmation that due to strong refining and demand for WTI crude, there is a premium for today's barrels as compared to winter ones. Luckily, per the EIA yesterday, "Record-setting liquid fuels production growth in the United States has more than offset the growth of unplanned global supply disruptions over the past few years." On the other hand, October ICE Brent Crude futures moved up 22 cents to $102.72, but the outer January futures contract settled at $104.49, representing a carry or contango (the opposite of a backwardation). With the future winter Brent price higher than the current one, Brent crude is currently at a discount to the future, indicating ample supplies and weak refining demand in Europe for this global crude benchmark. The Brent-WTI spread increased again yesterday and now stands at $8.84 per barrel, representing an incentive for U.S. refiners to export diesel and gasoline products. As mentioned in MarketWatch yesterday, the Brent-WTI spread has increased over 50% in the past two weeks.

The seasonal draw in gasoline inventories of 1 MMbs was expected, but the decline in NYMEX RBOB (Gasoline) of 1.72 cents to $2.7459 could be taking into consideration that in the week following Labor Day, U.S. gasoline demand will start to tick down and the incoming October RBOB contract will now be a cheaper winter grade RVP, which settled yesterday at $2.5905. And despite a larger than expected build of distillate inventories that seemed bearish, NYMEX ULSD (HO) gained 1.63 cents to settle at $2.8605, technically breaking up through one resistance level, a telling move by the bulls.

Currently, oil markets are up across the board, with NYMEX ULSD (HO) leading the way, up 2.20 cents to $2.8825, NYMEX RBOB up 66 points to $2.7525, NYMEX Crude up 20 cents to $94.08, and ICE Brent Crude up 35 cents to $103.07. Geopolitical issues continue to dominate news headlines, but have had a recent limited impact on oil markets due in part to U.S. crude production. Tomorrow we will recap geopolitical hotspots ahead of the holiday.

Bulls, Bears and Elephants, oh my?  Are the heating oil bears already going into hibernation?  Could it be there is an elephant in the room? There is a big elephant sitting in the Northeast distillate picture as PADD 1 (East Coast) distillates declined 1 MMbs, offsetting the overall 1.3 MMb distillate increase across the rest of the country  (see EIA's PADD 1 Distillate Fuel Oil Stocks chart below). With NY Harbor the pricing location for NYMEX RBOB and ULSD futures contracts, is the on-going inventory physical weakness, particularly in PADD 1B (Central including NY) and PADD 1A (New England), impacting the futures market?  Perhaps there was impact felt as East Coast refiners reduced their operable utilization % by 2.3 percentage points to 87.1% this week, as compared to 87.8% last year. PADD 1B distillate stocks are down 13.7%, but down 27.1% versus the 5-year average. PADD 1A distillate stocks are practically even to last year at this time, but are 41.5% lower than the 5-year average. Bulls may be seeing this elephant, but with the NYMEX RBOB and ULSD futures contracts set to expire tomorrow, ahead of the long Labor Day weekend, let's hope this is just a temporary pop up.  Click here to view today's Refined Products MarketWatch.

Oil markets up ahead of DOE Inventory Report

August 27, 2014

Recap:  Oil markets moved higher with ICE Brent Crude the exception as it settled slightly down, 15 cents to $102.50. NYMEX (WTI) Crude moved up 51 cents to $93.86.  NYMEX RBOB (Gasoline) settled up 1.34 cents to  $2.7631 and NYMEX ULSD (HO) moved up 73 points to $2.8422, crossing and settling above the $2.84 mark for the first time since August 15th. "'The market is just very lethargic, seemingly,' said Andy Lebow, senior vice president of energy at Jeffries Bache LLC. 'The market will be looking for some new drivers and some clarity' in the coming weeks, especially as refiners enter the maintenance season, he said. Market participants are also watching to see if Saudi Arabia plans to cut production to keep prices up. The OPEC Basket Price, a weighted average price of 12 grades of crude oil produced by Organization of the Petroleum Exporting Countries members, has traded below $100 a barrel since Aug. 15th." (Dow Jones 8-26-14) For the past 2 sessions, we have seen Brent and WTI crude contracts move in opposite directions, perhaps pointing to more interest in the Brent-WTI spread trade. Interestingly, the Brent-WTI spread is at $8.64; two weeks ago, it was at $5.65. This spread has increased 53% since the August 12th settlement,  and is providing on-going insight into the fact that refiners are still incentivized to export products like gasoline and diesel. The release of DOE inventory data this morning will be closely watched, as refiners have continued to post strong refinery % operable utilization numbers week over week, supporting this export scenario. How much of this production will be left over for storage here in the U.S. as we approach the final week of the summer driving season and we enter the heating season?  Oil markets will be looking for some guidance from the EIA's weekly DOE Inventory Report to be released this morning at 10:30 AM  (see inventory estimates below). 

Currently, oil markets are up across the board this morning. NYMEX ULSD is up 26 points to $2.8468, NYMEX RBOB is up 1.52 cents to $2.7783, NYMEX (WTI) Crude is up 33 cents to $94.19, and ICE Brent Crude is up 30 cents to $102.80. 

DOE Inventory Estimates:  Citi Futures is expecting the following increase (build) or decrease (draw) ranges: 2 to 3 MMb draw range for crude stocks. Bloomberg is expecting a 2.5 MMb decline, and  the 5-year average is a .1 MMb draw. For gasoline, Citi Future's is expecting a 5 to 1.5 MMb draw range, Bloomberg is expecting a 1.6 MMb draw, and the 5-year average is a 3.2 MMb draw for this report. For distillates, Citi Futures is expecting a .5 MMb draw to a .5 MMb build range, Bloomberg is expecting no change in inventories, and the 5-year average is a 1 MMb build. For refinery runs, Citi Futures is expecting a .5 percentage point decrease in refinery % operable utilization to 92.9%,  Bloomberg is expecting a .35 percentage point decline, and the 5-year average is 88.9%. The American Petroleum Institute (API) reported their results Tuesday afternoon: Crude stocks decreased 1.3 MMbs (with Cushing, OK crude stocks increasing .3 MMbs),  gasoline stocks decreased 3.2 MMbs, and distillate stocks increased 2.4 MMbs.Click here to view today's Refined Products MarketWatch.