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Market Intel Archives

Oil prices rallied as Russian President, Vladimir Putin stated Russia would freeze oil output

November 22, 2016

Recap: The upside momentum in oil prices continued, with WTI reaching a 3 week high and Brent marking a 4 week high. Monday's rally was sparked by words from Russian President, Vladimir Putin, stating that his country would freeze oil output. These statements come just ahead of next week's OPEC meeting in Vienna, where its members are expected to vote on an agreement to freeze output.

January WTI settled at $48.24 a barrel, up $1.88, or 4.1%, while January Brent added $2.04, or 4.4%, to settle at $48.90 a barrel.

December RBOB gained 5.7 cents, or 4.3%, to $1.397 a gallon and December heating oil added 6.7 cents, or 4.6%, to $1.525 a gallon.

Fundamental News:  Genscape reported that crude oil inventories in Cushing, Oklahoma built by 663,000 barrels in the week ending November 18th.

Ministers and sources said OPEC is moving closer towards finalizing its first deal since 2008 to limit output.  OPEC experts have made some progress on the first day of a two-day meeting of the High-Level Committee to agree on details of their plan.  Iran has been the main obstacle for such a deal, as Tehran wants exemptions as it tries to regain oil market share after the easing of Western sanctions in January.  Saudi Arabia has argued that Iran's output has peaked and it should not be granted major concessions.  On Friday, several OPEC oil ministers including Saudi Arabia's Khalid al-Falih met in Doha on the sidelines of a gas forum.  At the meeting, OPEC member countries proposed Iran limit its output at 3.92 million bpd.  Iran has yet to respond to the proposal. 

Russia's President Vladimir Putin told reporters at the Asia-Pacific Economic Cooperation summit in Lima that he was not 100% certain whether an agreement will be reached by OPEC to limit its output.  However, he stated that there is a strong likelihood that it will be achieved.  He sees no obstacles to an OPEC agreement.  He reaffirmed Russia is willing to freeze crude output at current levels.  Separately, the Kremlin said Russia's President does not plan to have separate meetings with Russian oil companies before OPEC's meeting.     

Iraq's Oil Ministry said the country put forward three new proposals to help the producer group reach an agreement on an output freeze.  Iraq's Oil Minister, Jabbar al-Luaibi, said the country's legitimate demands should not be considered as obstacles to reaching an agreement.  

Iran's Oil Minister, Bijan Namdar Zanganeh, said he is optimistic that OPEC members will agree to proposed production cuts at a meeting in Vienna on November 30th. 

Libya's OPEC Governor, Mohamed Oun, said it is still under discussion whether the agreement to cut output will last for 6 months or 1 year.  He said the first of a two day meeting of the High-Level Committee went well.  

Goldman Sachs raised its oil price forecast for early next year, saying it is "tactically bullish" on the likelihood that OPEC will be able to reach a deal to cut output.  It expects oil prices in New York to rise to an average $55/barrel during the first half of 2017 from previous estimates of $45 and $50/barrel. 

Shell said Nigeria's Bonny Light crude export terminal is not under force majeure.  Last week, the Niger Delta Avengers claimed an attack on the Nembe Creek pipeline. 

IIR reported that US oil refiners are expected to shut in 418,000 bpd of capacity in the week ending November 25th, increasing available refining capacity by 220,000 bpd from the previous week.  IIR expects offline capacity to fall to 247,000 bpd in the week ending December 2nd. 


Early Market Call - as of 9:00 AM EDT

WTI - Jan $48.12, down 12 cents

RBOB - Dec $1.4097, up 1.32 cents

HO - Dec $1.5298, up 53 points 


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Oil prices gained for the first time in 4 weeks

November 21, 2016

Recap: Oil prices gained for the first time in 4 weeks, stemming 3 straight weeks of losses. December WTI worked lower early in the session, as the dollar rose, extending Thursday's sell-off. Thoughts of an OPEC agreement to freeze output slowly overshadowed a strong dollar and rising U.S. production, dragging prices away from the day's lows. Spot WTI rose to a high of $45.77 before paring gains to settle at $45.69 a barrel, up 27 cents, or 0.59%. January Brent gained 37 cents, or 0.80%, to finish at $46.86.

December RBOB fell less than half a cent to $1.339 a gallon for the day, but rose about 2.6% for the week. December heating oil rose 1.1 cents, or 0.7%, to $1.458 a gallon, for a weekly climb of 4%. 

Fundamental News:  Oil Movements reported that OPEC will ship 23.91 million bpd in the four weeks ending December 3rd, down 10,000 bpd from the period ending November 5th.  It reported that Middle East shipments, including from non-OPEC producers Oman and Yemen, will fall by 380,000 bpd to 17.16 million bpd over the same period. 

Ministers and sources stated that OPEC is moving closer towards finalizing its first deal since 2008 to limit oil output this month, with most members prepared to offer Iran significant flexibility on production volumes.  On Friday, several OPEC oil ministers including Saudi Arabia's Khalid al-Falih, met in Doha on the sidelines of a gas forum.  At the meeting, OPEC member countries proposed Iran cap its output at 3.92 million bpd.  Iran has previously stated that it would accept a freeze at between 4 and 4.2 million bpd.  Gulf OPEC sources have stated that they wanted Iran to cap output at about 3.6-3.7 million bpd.  Saudi Arabia's Oil Minister said the meeting went well, but declined further comment.  Earlier, he stated that he believes OPEC will reach a deal to cut oil output.  Russia's Energy Minister, Alexander Novak, participated in Friday's meeting and said he thought OPEC was moving closer to a deal.  He said he had a productive meeting with Saudi Arabia's Energy Minister.  He said if an agreement is reached, Russia was prepared to join and cap output for six months or longer.  He also stated that more non-OPEC producers could join such a pact.  Iran's OPEC Governor, Hussein Kazempour Ardabili, said he is very optimistic for the OPEC deal.  

OPEC's Secretary General, Mohammed Barkindo, said he had open, frank and constructive talks with representatives of Ecuador. He said he will continue consultations in Iran before November 30th

Baker Hughes reported that US oil companies added 19 drilling rigs in the week ending November 18th, bringing the total count up to 471, the most since January. 

Nigeria's hopes of increasing its oil production this year have been diminished, as renewed attacks on oil infrastructure in the Niger Delta have shut in production of Forcados crude in the past week. 

NorthStar Midstream said a new 40,000 bpd crude oil pipeline that will feed into the Dakota Access Pipeline and North Dakota rail terminals is open for commissioning.  While the initial capacity of the NST Express Pipeline will be 40,000 bpd, it has expandable capacity up to 100,000 bpd. 

IIR reported that US oil refiners are expected to shut in 638,000 bpd of capacity in the week ending November 18th, increasing available capacity by 69,000 bpd from the previous week.  IIR expects offline capacity to fall to 418,000 bpd in the week ending November 25th and to 247,000 bpd in the week ending December 2nd. 


Early Market Call - as of 9:00 AM EDT

WTI - Dec $46.98, $1.29

RBOB - Dec $1.3840, up 4.49 cents

HO - Dec $1.5058, up 4.81 cents


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Oil prices rose after renewed thoughts of an agreement to freeze output

November 18, 2016

Recap: Oil prices rose Thursday on renewed thoughts of an agreement by OPEC and some non-OPEC producers to freeze output, however, a strong dollar capped gains. December WTI rose to a high of $46.58, up $1.01, or 2.2%, while Brent for January delivery topped off at $47.62, up 99 cents, or 2%.

After rising early in the session, oil futures drifted lower throughout the day, as the U.S. dollar index reached multi-year highs. A post settlement sell-off ensued taking prices to new lows. December WTI settled at $45.42, down 15 cents, or 0.33%, but fell an additional 54 cents as the dollar strengthened. January Brent settled at $46.49, down 14 cents, or 0.30%, but like the WTI it slipped 48 cents in post settlement trading.   

December RBOB jumped 2.4 cents, or 1.8%, to $1.343 a gallon, while December heating tacked on 1.2 cents, or 0.8%, to $1.447 a gallon.

Fundamental News:  Genscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending November 15th increased by 303,002 barrels from Tuesday, November 8th and by 380,672 barrels from Friday, November 11th. 

Saudi Arabia's Energy Minister, Khalid al-Falih, said he was optimistic about OPEC's deal to limit its oil output and mentioned the lower end of a previously agreed production target.  He said the oil market was on a path towards becoming balanced and that reaching a decision to activate a ceiling of 32.5 million bpd will speed up the market's recovery and will benefit producers and consumers. 

Algeria's Energy Minister, Nouredine Bouterfa, said the issue of Iran's production would not undermine a deal.  He said there is strong consensus among OPEC producers for a freeze.   

Qatar's Energy Minister, Mohammed al-Sada, said Iran and Iraq were being asked to freeze its output at current levels.

The Joint Organizations Data Initiative reported that Saudi Arabia's crude oil exports in September increased to 7.812 million bpd from 7.305 million bpd in August. 

The head of commodity strategy at Saxo Bank, Ole Hansen, said OPEC faces crude prices as low as $40/barrel if the producer group fails to limit output when it meets in Vienna later this month.  He said Russia will likely not join in a cut but could freeze its production.  He added that an OPEC agreement to cut production by at least 1 million bpd could increase oil prices to $50/barrel, with $55 to $60/barrel possible next year on increased demand. 

According to National Oil Corp Chairman, Mustafa Sanalla, Libya's crude production in November is at 600,000 bpd.  He said the country's output will increase steadily and surpass 1 million bpd in the first half of 2017. 

Bloomberg reported that the Middle East has the fewest tankers available for the time of the year since 2011.  The surplus of VLCCs in the Persian Gulf relative to anticipated cargoes in the next four weeks was at 11%, compared with an average of 14% at this time of year from 2011 to 2015. 

The US Environmental Protection Agency reported that US generation of renewable fuel blending credits increased in October to 1.29 billion, up from 1.25 billion a month earlier and 342.6 million biodiesel blending credits were generated in October, compared with 395 million in September. 


Early Market Call - as of 9:00 AM EDT

WTI - Dec $45.39, down 3 cents

RBOB - Dec $1.3394, down 36 points

HO - Dec $1.4574, up 1.04 cents 


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Oil futures finished low as global supply glut weighed on prices

November 17, 2016

Recap: After a volatile day of trading, oil futures finished lower on the day, as the 5.3 million barrel build in U.S. crude oil inventories overshadowed the possibility of an agreement to freeze output by OPEC and other major oil producers. Initially, traders thought the increase would likely bring about an agreement among those meeting in Vienna on Nov. 30, as there is need for an immediate solution to falling prices. This, combined with a statement by Russia's Energy Minister that Russia was ready to support OPEC's decision on imposing an output freeze, sent oil futures to their highs of the day. December WTI traded as high as $46.41, up 1.3% on the day, while January Brent topped the session at $47.56, up 1.2%. Once again, the global supply glut weighed on prices, pushing WTI to a settlement of $45.57, down 24 cents, or 0.52%, with Brent finishing 32 cents, or 0.68% lower, to settle at $46.63.

December RBOB  fell 1.6 cents, or 1.2%, to $1.319 a gallon and December heating oil finished just under a penny at $1.435 a gallon.

Fundamental News:  Genscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending November 11th fell to 61,454,642 barrels, down 18,586 barrels on the week and down 77,670 barrels from Tuesday, November 8th.  

The IEA increased its outlook for US output in 2020 by 900,000 bpd, estimating it will reach 14.1 million bpd amid growth from shale output.  Its projection for the rest of the world is weaker than before, after new projects to develop conventional crude fell to the lowest level since the 1950s.  That will allow OPEC to preserve its share of global markets.  US oil production will expand by 1.3 million bpd from 2015 to 2020, with about 85% of the growth accounted for by shale oil.  It said US shale oil producers will increase their output if oil prices reach $60/barrel.  The head of the IEA, Fatih Birol, said that level would be enough for many US shale companies to restart stalled production, although it would take about nine months for the new supply to reach the market. 

OPEC sources stated that OPEC officials are working to agree on details of their plan to limit oil supply and gaps over some sticking points are narrowing.  One issue has been the level of production at which Iran would be expected to freeze its output.  Sources say Iran wants an output cap of 4 million bpd, while other members of OPEC want Iran to freeze output at about 3.7 million bpd.  OPEC embarked on its final diplomatic effort to secure a deal, with its top official heading to countries such as Russia.  This followed an unannounced meeting in London between OPEC Secretary General, Mohammed Barkindo, and Saudi Arabia's Energy Minister, Khalid al-Falih.  OPEC Secretary General is visiting more OPEC members in the next few days.  He is scheduled to meet Venezuela's President Nicolas Maduro later on Wednesday and then travel to Ecuador and Iran. 

Iran's Oil Minister, Bijan Zanganeh will not attend informal talks between some OPEC members in Doha on Friday.  Two OPEC sources said Iran's OPEC governor would represent Iran instead.  Earlier on Wednesday, an Algerian energy source said a number of energy ministers from OPEC countries would meet in Doha on Friday to try to build consensus over the group's decision to limit output.

Russia's Energy Minister, Alexander Novak, said Russia is ready to support OPEC's decision on an oil output freeze.  He said Russia will continue consultations on joint action for the oil market.  He hopes OPEC finds a consensus on its decision to cut output by November 30th and sees a big possibility for OPEC to agree.  He said there are discussions of scenarios to reach an oil market balance in a shorter period of time.  He also stated that Russia is discussing whether to have a meeting with Saudi Arabia's Oil Minister, Khalid al-Falih, in Doha. 


Early Market Call - as of 9:00 AM EDT

WTI - Dec $46.22, up 66 cents

RBOB - Dec $1.3331, up 1.4 cents

HO - Dec $1.4592, up 2.42 cents


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Oil prices rallied on renewed thoughts of a possible OPEC agreement

November 16, 2016

Recap: Oil prices surged 6%, as traders began to hedge against upside risk ahead of the Nov. 30 OPEC meeting. Tuesday's rally halted three consecutive days of losses on renewed thoughts of possible agreement among OPEC members to freeze and/or curtail output. In a late session run-up, December WTI reached a high of $45.98, marking the highest percentage gain for WTI since April. Gains were slightly pared, with the December WTI settling at $45.81, up $2.49, or 5.8%. Brent for January delivery peaked at $47.15, also its highest percentage gain since April. This spot contract settled at $46.96, up $2.52, or 5.67%.

December RBOB gained 5.7 cents, or 4.5%, to $1.335 a gallon, while December heating oil rose 5.8 cents, or 4.2%, to $1.444 a gallon.

Fundamental News: Saudi Arabia's Energy Minister, Khalid al-Falih, is expected to travel to the Qatari capital, Doha, this week for meetings with oil-producing countries on the sidelines of an energy forum.  He is expected to meet with other energy ministers from OPEC and possibly with Russian Energy Minister, Alexander Novak, on Friday.  It was not immediately clear whether Saudi Arabia's Energy Minister would meet with Iranian Oil Minister, Bijan Zanganeh. 

According to a delegate familiar with the OPEC talks, Saudi Arabia is ready to cut production, but only if the effort is collective.  All members must agree to collective action, pledge to share the burden of cuts equitably, and do so in a way that is transparent and has credibility with the market. This means Saudi Arabia still believes Iraq needs to cut output and Iran has to freeze its production around current levels. 

Venezuela's President, Nicolas Maduro, said he will meet with OPEC Secretary General, Mohammed Barkindo, in Caracas to discuss a potential agreement to limit global oil production.  The meeting is scheduled for Wednesday.  Meanwhile, OPEC's Secretary General is scheduled to travel to Iran to discuss an upcoming deal to limit output.  He met with Saudi Arabia's Energy Minister, Khalid al-Falih, before departing to Morocco for the climate change conference.   

Russia's Lukoil Chief Executive, Vagit Alekperov, said he believed an oil deficit might happen in 2018 and oil prices might increase in the future.  He also stated that he hoped that OPEC will find a solution to stabilize the oil markets during its meeting on November 30th. 

Nigerian militant group, Niger Delta Avengers, said it attacked the Nembe Creek Trunk Line in the southern Niger Delta on Monday.  The group said on Sunday that it had resumed attacks because of the continued presence of the army in the region.  The NDA said its strike team attacked the Nembe 1, 2 and 3 branches of the pipeline.  However, the military said troops stationed at Nembe Creek "repelled saboteurs who tried to vandalize and steal a control unit" from a well head.  A spokesman said attackers who targeted the Nembe Creek pipeline on Monday had been thwarted. 

Demonstrators across US cities will gather outside offices of the Army Corps of Engineers, banks and energy companies on Tuesday in the largest protest against the Dakota Access Pipeline since the US government halted the project in September.  More than 200 protests are set to take place in a "Day of Action" called for by indigenous leaders in support of the Standing Rock Sioux tribe and in an effort to urge the Army Corps of Engineers and US government to stop the pipeline.  Separately, Energy Transfer Partners, the company building the $3.8 billion Dakota Access Pipeline, is seeking a federal court's permission to lay pipe under a Missouri River reservoir in North Dakota and finish the four state project.   


Early Market Call - as of 10:00 AM EDT

WTI - Dec $45.43 down 38 cents

RBOB - Dec $1.3252 down 98 points

HO - Dec $1.4347 down 92 points


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WTI and Brent fell to three month lows as the dollar continued to strengthen

November 15, 2016

Recap: Both WTI and Brent fell to three month lows, as the dollar continued to strengthen and as concern grew over an abundance of supplies. December WTI fell as much as 2.7%, hitting a low of $42.20, while January Brent dipped as much as 2.6%, bottoming out at $43.57. Renewed hopes for an agreement among OPEC members turned prices around, reversing early losses. Spot WTI settled at $43.32 a barrel, down 9 cents, while January Brent fell 25 cents, to settle at $44.43 a barrel. 

December RBOB fell 1.5 cents, or 1.1%, to $1.291 a gallon, while December heating oil slipped just under a penny to $1.392 a gallon.

Fundamental News:  OPEC's oil production reached a new record high in October of 33.643 million bpd, up 237,000 bpd on the month, as Iraq, Libya and Nigeria significantly increased output.  Saudi Arabia showed no signs of giving up its market share strategy, reporting that its output was 10.625 million bpd.  It was the fourth month that Saudi Arabia reported production above 10.6 million bpd.

According to sources, OPEC is still divided over an output cut after a weekend of meetings, and is seeking to narrow Saudi Arabia's difference with Iran and Iraq. OPEC nations embarked on a final diplomatic effort to secure a deal on oil cuts, with Qatar, Algeria and Venezuela leading the push to overcome the divide between the group's largest producers.  Saudi Arabia is ready to cut its production, but only if the effort is a collective one. 

Genscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending November 11th fell by 18,586 barrels from Friday, November 4th and by 77,670 barrels from Tuesday, November 8th to 61,454,642 barrels. 

The executive chairman of PIRA Energy Group, Gary Ross, said it is in the interest of all producers to reach a deal that is aimed at stabilizing prices, which are 61% lower than their 2014-highs.  He said a failure to implement an agreement could drag down crude to as low as $35/barrel, while success at the group's meeting later this month may push oil to $60/barrel, almost 35% higher than current levels. 

Iran's Oil Ministry reported that Iran increased its oil output at three western fields faster than it expected as Saudi Arabia called for a collective output cut later this month to help rebalance the market.  Iran's President, Hassan Rouhani, said output at the fields west of Karoun River increased to about 250,000 bpd from 65,000 bpd in 2013. 

Iraq is expected to ship 98.047 million barrels or 3.163 million bpd of Basra crude from its southern ports in December, slightly lower than in this month.  Basra Light crude exports in December are set to increase to 2.437 million bpd while Basra Heavy exports are expected to fall to 726,000 bpd in December from 900,000 bpd in November.   

According to Bloomberg, total US waterborne LPG exports from Houston, Port Arthur, Philadelphia and Seattle fell by 33.7% to 654,877 bpd in the week ending November 10th. 

Fitch's BMI Research reported that the prospects for OPEC members to agree on an output cut or freeze have been notably reduced following Donald Trump's victory in the US elections. 

Barclays sees WTI in backwardation by the summer of 2017.  The overall health of the physical crude market has improved this year and recent weakness in price and time spreads is largely seasonal. 

Bernstein analysts reported that global oil inventories increased 23 million barrels in the third quarter, the smallest build since the fourth quarter of 2014. 


Early Market Call - as of 9:00 AM EDT

WTI - Dec $44.57, up $1.25

RBOB - Dec $1.3092, up 3.12 cents

HO - Dec $1.4157, up 3.02 cents 


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Brent and WTI hit lowest levels in months while OPEC's oil production hits record high

November 14, 2016

Recap: Brent fell to its lowest level in 3 months, while WTI hit new 2 month lows on reports that OPEC's oil production hit a record high in October. The 240,000 barrel per day increase was attributed to increases from Libya, Nigeria and Iraq, the same members that have been lobbying for exemptions from any cuts, and or freezes. Both WTI and Brent fell as much as 3.6% during trading before trimming losses. December WTI settled at $43.41 a barrel, down $1.25 or 2.8%, while Brent for January delivery slipped to $44.75 a barrel, down $1.09, or 2.38%.

This marks the third week in a row that oil futures fell, as doubt continue to grow that OPEC will be able to agree on output cuts and or freezes. For the first time since the beginning of August, WTI settled below its 200-day moving average. Back at that time, there was a lack of confirmation that the down trend would continue, as spot futures failed to remain below this average, so the upside resumed. Technical traders will be looking for a retest of this average, currently set at $43.83. A run-up and retreat followed by a second settlement below this average will confirm additional downside movement. Support to the downside is set at $42.50 and below that at $41.70.   

December RBOB fell 3.2 cents, or 2.4%, to $1.305 a gallon-about 5.4% lower for the week, while December heating oil lost 3.5 cents, or 2.5%, to $1.401 a gallon, for a weekly loss of about 2%.

Fundamental News:  In its latest monthly report, OPEC stated that despite its plan to limit output, it increased its oil production in October to another record high.  OPEC produced 33.64 million bpd in October, up 240,000 bpd from September.  OPEC left its 2017 world oil demand growth forecast unchanged at 1.15 million bpd.  It, however, raised its forecast for demand for its crude in 2017 by 100,000 bpd to 32.69 million bpd.  It said the global market will see an average surplus of 950,000 bpd in 2017 compared with its previous forecast of 800,000 bpd.

Baker Hughes reported that the number of rigs searching for oil in the US increased by 2 to 452 in the week ending November 11th. 

Industry sources stated that Saudi Arabia and Kuwait kept their oil production relatively steady in October.  Saudi Arabia's crude oil production in October fell to 10.62 million bpd compared with 10.65 million bpd in September.  Kuwait's oil production in October increased to 3 million bpd from 2.97 million bpd in September.   

Nigeria's Oil Minister, Emmanuel Ibe Kachikwu, urged militants on Friday to stop their attacks on oil facilities in Nigeria's southern Niger Delta hub and to pursue talks with the government.  The call comes after attacks in the last two weeks on the Trans Forcados Pipeline.   

Colonial Pipeline is allocating Cycle 64 shipments on Line 2, its main distillate line from Houston, Texas to Greensboro, North Carolina.

India's Oil Ministry reported that the country's fuel demand in October increased by 6.6% on the year to 16.49 million tons.  Sales of gasoline increased by 13.8% on the year to 2.11 million tons while diesel demand increased by 5.1% to 6.67 million tons.

IIR reported that US oil refiners are expected to shut in 695,000 bpd of capacity in the week ending November 11th, increasing available refining capacity by 277,000 bpd in the previous week.  IIR expects offline capacity to fall to 450,000 bpd in the week ending November 18th and 350,000 bpd in the subsequent week. 


Early Market Call - as of 9:00 AM EDT

WTI - Dec $43.01 down 40 cents

RBOB - Dec $1.3004 down 49 points

HO - Dec $1.3957 down 55 points


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Oil prices trimmed gains as shock of Donald Trump's election to presidency subdued

November 11, 2016

Recap: With the shock of Donald Trump's election to the presidency of the U.S. subduing, oil traders were better able to focus on the immediate underlying fundamentals affecting oil markets. Oil prices on both sides of the Atlantic trimmed gains made yesterday, as investors contended with the global supply glut and the upcoming OPEC meeting set for Nov. 30 in Vienna. 

December WTI had an inside trading session, as it was unable to break out of yesterday's range, on what was a thinly traded market. This spot contract came within 4 cents of $45.68, the 200-day moving average before falling into a slow descent, to new post settlement lows, as the dollar strengthened. December futures settled at $44.66, down 61 cents, or 1.35%. January Brent settled at $45.83, down 52 cents, or 1.12%.

December RBOB slipped 2 cents, or 1.4%, to $1.338 a gallon, while December heating oil lost half a cent to $1.437 a gallon.

Fundamental News:  The IEA reported that OPEC's crude oil production increased for a fifth consecutive month to a record 33.83 million bpd in October from 33.6 million bpd in September and 33.49 million bpd in August.  The IEA also stated that the cost of failing to reach a deal this month is rising for OPEC as rival producers are set to revive production in 2017.  It said crude prices may retreat again amid "relentless global supply growth" unless OPEC enacts significant output cuts.  The IEA also stated that the oil market surplus may run into a third year in 2017 without an output cut from OPEC, while increasing production from exporters around the globe could lead to unyielding supply growth.  It stated that global supply increased by 800,000 bpd in October to 97.8 million bpd, led by record OPEC output and rising production from non-OPEC members such as Russia, Brazil, Canada and Kazakhstan.  The IEA kept its demand growth forecast for 2016 at 1.2 million bpd and expects consumption to increase at the same pace next year.

Genscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending November 8th fell by 663,916 barrels on the week but increased by 59,084 barrels from Friday, November 4th.  

Russia's Energy Minister, Alexander Novak, said global crude oil production could be frozen at November levels if the world's leading oil producers reach an agreement on November 30th.  He said he saw higher chances of reaching an agreement than before.  He said Russia would prefer output to be frozen.   

Voters in California's Monterey County passed a ballot initiative on Tuesday to ban hydraulic fracturing in the county, a vote which may shut down all oil production in the county.  Voters approved the initiative, which will ban the use of fracking and other high-intensity methods of oil and gas extraction, prohibit new oil and gas operations in the county and phase out operational oil and gas wells.  The approval of the measure marked the first time a US county with relatively significant oil production has voted to ban fracking.  Monterey County's San Ardo field has produced on average 21,900 bpd crude this year, about 4.4% of California's overall 499,000 bpd of onshore production.  The measure was expected to be challenged in court.   

The US EPA said it plans to deny several petitions from oil groups to start the process towards making a change to the country's biofuels program.  EPA said it did not believe it should initiate a full rulemaking to change the so-called "point of obligation" of the Renewable Fuel Standard. 


Early Market Call - as of 9:00 AM EDT

WTI - Dec $43.82 down 83 cents

RBOB - Dec $1.3283, up 99 points

HO - Dec $1.4156, down 2.1 cents



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Election of Donald Trump sent shockwaves through U.S financial markets, sent oil prices low in early trading

November 10, 2016

Recap: Donald Trump's election to the presidency of the U.S. sent shockwaves through U.S. financial markets, which in turn dragged oil prices lower in early trading. December WTI fell as much as 4.2%, to a low of $43.07, the lowest level that a spot month has traded in 8 weeks. January Brent bottomed at $44.40, a 13 week low for the spot contract.

The election overshadowed this week's 2.5 million barrel increase in U.S. crude oil inventories, with oil prices rebounding along with U.S. financial markets, as traders reassessed Trump's election, and what it could mean for the U.S. economy.  Investor's appetite for risk was wetted, sparking a rally, which pushed oil to its highest settlement in a week. December WTI settled at $45.27 a barrel, up 29 cents, or 0.64%. January Brent finished the session up 32 cents, or 0.70%, to settle at $46.36 a barrel.   

December RBOB slipped 1.2 cents, or 0.9%, to settle at $1.357 a gallon, while December heating oil finished unchanged, to settle at $1.441 a gallon.

Fundamental News:  Venezuela's President Nicolas Maduro wrote to leaders of Russia, Iraq, Iran and Saudi Arabia, urging that decisions be taken at the highest level to implement OPEC's Algiers agreement. 

Iran's Oil Minister, Bijan Namdar Zanganeh, is optimistic an agreement will be reached at the next OPEC meeting on a collective output ceiling for the group. 

Royal Dutch Shell shut down its Escravos flow station in Nigeria's Niger Delta due to a protest by locals in the southern region.  He said it is hopeful that the protesters will call off their action to ensure the resumption of project activities and its operations.

Euroilstock reported that European refiners' crude intake in October was 2.8% lower than a year ago and 1.7% lower on the month at 10.36 million bpd.  European crude and oil product stocks increased by 22.67% on the year and by 2.67% on the month to 1.151 billion barrels.  Euroilstock reported that European crude oil stocks in October fell by 2.86% on the year and by 0.08% on the month to 483.33 million barrels.  It also reported that gasoline stocks in October increased by 8.5% on the year and 1.4% on the month to 119.09 million barrels while middle distillates stocks increased by 15.78% on the year and by 2.48% on the month to 449.33 million barrels.  European fuel oil stocks fell by 1.63% on the year and by 1.43% on the week to 74.69 million barrels.

Genscape reported that crude inventories in the ARA region fell by 7.2% to 58.99 million barrels in the week ending November 4th.

Venezuela's refined product shortage is not expected to ease any time soon, as an increase in imports has yet to offset lower refining rates.  Over the last several weeks, fuel shortages have been reported in several states across Venezuela.  PDVSA recently bought two 300,000 barrel cargoes for delivery between November 10th and 20th, one of ULSD from Noble and another of high sulfur diesel from Helsinge.  It was one of many such purchases in recent months.  Due to underinvestment in its refining sector and declining operating rates, PDVSA is unable to supply the local market without turning to imports, and even then its cash problems prevent it from importing enough to satisfy demand.  Currently, PDVSA is producing an average of 90,000 bpd of gasoline, an amount that is insufficient to supply the domestic market that consumes 260,000 bpd.

IIR reported that US oil refiners are expected to shut in 654,000 bpd of capacity in the week ending November 11th, increasing available refining capacity by 277,000 bpd from the previous week.  IIR expects offline capacity to fall to 418,000 bpd in the week ending November 18th.


Early Market Call - as of 9:00 AM EDT

WTI - Dec $44.60 down 67 cents

RBOB - Dec $1.3458 down 1.37 cents

HO - Dec $1.4247 down 1.64 cents


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Oil market fell as low as $43.07 overnight as the US presidential election results were announced

November 09, 2016

Recap: Oil prices edged slightly higher, as the voting polls in the U.S. opened, and as traders unloaded positions ahead of the outcome. Prices briefly dipped below unchanged, as the dollar strengthened and as U.S. stock index futures fell. Trading remained choppy throughout the session; with December WTI creeping slowly back toward its 200-day moving average of $45.62. This spot futures contract settled at $44.98, up 9 cents, or 0.2%. January Brent fell 11 cents, or 0.2%, to settle at $46.04.

The oil market overnight fell to as low as $43.07 as the presidential election results were being announced.  The market surprisingly recovered some of its losses in Wednesday's early morning trading, with Republican Donald Trump winning the presidential election.  However, the overriding factor in the market will be the upcoming OPEC meeting. There are those that believe an agreement will be met, as some members are asking for an exemption, and there is still the need to get non-OPEC producers, such as Russia on board.

December RBOB fell less than half a cent, to settle at $1.369, while December heating oil was little changed, settling at $1.441.

Fundamental News: The EIA stated in its latest Short Term Energy Outlook that global oil demand growth was revised upward from its previous forecast, with global petroleum demand expected to increase by 1.33 million bpd in 2016 and by 1.52 million bpd in 2017 to 95.4 million bpd and 96.92 million bpd, respectively.  It expects OPEC production to increase by 790,000 bpd to 32.54 million bpd in 2016 and by 720,000 bpd to 33.26 million bpd in 2017.  Non-OPEC supply in 2016 is expected to fall by 610,000 bpd to 56.88 million bpd and increase by 320,000 bpd to 57.2 million bpd in 2017.  Meanwhile, US oil demand is expected to increase by 110,000 bpd to 19.64 million bpd in 2016 and by 260,000 bpd to 19.9 million bpd in 2017.  US gasoline demand is expected to increase by 140,000 bpd to 9.32 million bpd in 2016 and by 50,000 bpd to 9.37 million bpd in 2017.  Distillate demand is expected to fall by 150,000 bpd to 3.85 million bpd in 2016 but increase by 70,000 bpd to 3.92 million bpd in 2017.  US oil production in 2016 is expected to decline by 580,000 to 8.84 million bpd in 2016 and by 110,000 bpd to 8.73 million bpd in 2017.  Brent crude prices are expected to average $43/barrel in 2016 and $51/barrel in 2017.  WTI crude oil prices are forecast to average $1/barrel less than Brent prices in 2017.     

In its 2016 World Oil Outlook, OPEC stated that global demand for its crude oil will increase in the next three years.  OPEC said that demand for its crude would reach 33.7 million bpd in 2019, up 1 million bpd from 2016.  Expected demand for OPEC crude in 2019 is only 300,000 bpd more than it is pumping now.  Demand for OPEC crude is seen flat from 2019 to 2021.  It reported that global tight oil output will reach 4.55 million bpd by 2020 and peak at 6.73 million bpd in 2030.  OPEC raised its forecast for global oil demand next year and through the end of the decade.  Demand is expected to reach 95.3 million bpd in 2017. 

Iran's Oil Minister, Bijan Zanganeh, said he was still optimistic about implementation of a deal among oil producers to freeze output levels which was reached in Algeria in September. 

OPEC's Secretary General, Mohammed Barkindo, said failure to implement a deal agreed to in Algiers in September to cut output would bring negative consequences to an already fragile oil industry. 

Colonial Pipeline said it is moving forward with the removal of the temporary bypass in Alabama during the week of November 13th.  It has cut allocation levels to accommodate the work.  It said operating rates will not be impacted after the replacement of the bypass.


Early Market Call - as of 9:00 AM EDT

WTI - Dec $44.70, down 28 cents 

RBOB - Dec $1.3563, down 1.26 cents 

HO - Dec $1.4348, down 61 points  


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