Recap: Despite U.S. oil stocks rising 4.2 million barrels in the week ending Oct. 7, the first rise since August, oil prices rose after the EIA report indicated a drop in U.S. output. According to the report, domestic oil production for the lower 48 states fell by 36,000 barrels per day, to 7.969 million per day. This is the lowest level since June 2014. Traders typically hold 8 million barrels per day as a gauge.
November WTI was trading just above $50 a barrel prior to the release of the numbers, when a knee jerk reaction kicked in, sending this spot futures contract to the day's low of $49.36. After traders took an in-depth look at the numbers, realizing the domestic drop in output, the down move was reversed and November WTI made a steady climb toward $50.59, the high of the day. Gains were slightly pared, with spot WTI settling at $50.44, up 26 cents, or 0.5%. Brent for December delivery gained 22 cents, or 0.4%, to settle at $52.03.
November RBOB settled at $1.482 a gallon, up 2 cents, or 1.4%, while November heating oil added 1.3 cents, or 0.8%, to $1.58 a gallon.
Fundamental News: In its Short Term Energy Outlook, the EIA reported that the outlook for global crude oil demand was revised modestly downward from its previous report, with global oil demand expected to grow by 1.3 million bpd in both 2016 and 2017. Total global petroleum demand is forecast to increase by 1.29 million bpd to 95.33 million bpd in 2016 and by 1.34 million bpd to 96.67 million bpd in 2017. It reported that OPEC production is expected to increase by 880,000 bpd to 39.2 million bpd in 2016 and by 870,000 bpd to 40.07 million bpd in 2017. Total US petroleum demand is forecast to increase by 70,000 bpd to 19.6 million bpd in 2016 and increase by 230,000 bpd to 19.83 million bpd in 2017. Gasoline demand is estimated to increase by 160,000 bpd to 9.34 million bpd in 2016 and by 50,000 bpd to 9.39 million bpd in 2017. Distillate demand is forecast to fall by 180,000 bpd to 3.82 million bpd in 2016, but increase by 130,000 bpd to 3.95 million bpd in 2017. US oil production is expected to fall by 690,000 bpd to 8.73 million bpd in 2016 and by 140,000 bpd to 8.59 million bpd in 2017. The price of Brent crude is forecast to average $43/barrel in 2016 and $51/barrel in 2017, $1/barrel higher and $1/barrel lower respectively, than forecast in last month's report. WTI crude prices are forecast to average about $1/barrel less than Brent in 2016 and 2017.
The EIA reported that US refinery utilization last week reached its lowest level since April 2013. Total US distillate stocks fell by 3.7 million barrels on the week. US East Coast distillate stocks reached its highest level since December 2010 while US Gulf Coast distillate stocks fell by the largest amount since September 2005. US East Coast crude oil imports saw the largest increase since September 2008.
Iraq nominated 97.18 million barrels or 3.239 million bpd of crude oil for export in November, down 41,000 bpd from October's loading program. The program consists of 2.339 million bpd of Basrah Light crude. A total of 900,000 bpd of Basrah Heavy crude has been allocated, up from 678,000 bpd in October.
India received its first cargo of 260,000 metric tons of Iranian crude for its strategic reserves on the west coast.
PDVSA is seeking one 300,000 barrel cargo of ultra low sulfur diesel and one 300,000 barrel cargo of high sulfur diesel.
Gasoline stocks held independently in the Amsterdam-Rotterdam-Antwerp oil terminal in the week ending October 13th increased by 4.66% on the week but fell by 15.34% on the year to 651,000 tons. Gasoil stocks increased by 0.56% on the week but fell by 18.09% on the year to 3.039 million tons while fuel oil stocks fell by 38.78% on the week and by 50.05% on the year to 513,000 tons.
Early Market Call - as of 9:00 AM EDT
WTI - Nov $50.76, up 31 cents
RBOB - Nov $1.4806, down 12 points
HO - Nov $1.5721, down 78 points
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