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Market Intel Archives

Oil market posted an outside trading day on Monday following the inside trading day on Friday

September 19, 2017

Recap: After the oil market posted an inside trading day on Friday, the market breached its previous range and posted an outside trading day on Monday.  The market traded to $50.33 in overnight trading, breaching a previous high of $50.13, early in the session before it gave up any of its gains.  It breached its previous low and retraced almost 38% of its move from a low of $47.00 to a high of $50.50, as it sold off to a low of $49.19 by mid-day.  The market, however, bounced off its low and rallied back towards the $50 level ahead of the close.  The October WTI contract settled at $49.91, up 2 cents, while the November Brent contract settled at $55.48, down 14 cents.  Meanwhile, the product markets ended the session mixed, with the heating oil market settling down 1.92 cents at $1.7796 and the RBOB market settling up 69 points at $1.6686.

Fundamental News: Genscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending September 15th increased by 675,812 barrels on the week and by 86,656 barrels from Tuesday, September 12th to 62,002,800 barrels.

According to the Joint Organizations Data Initiative, Saudi Arabia’s crude oil exports in July fell to 6.693 million bpd from 6.889 million bpd in June.  Saudi Arabia’s crude oil production fell by 60,000 bpd on the month to 10.01 million bpd in July.  Meanwhile, its crude stocks fell by 844,000 barrels to 255.706 million barrels in July.  Saudi Arabia’s domestic crude throughput increased by 110,000 bpd to 2.687 million bpd in July. 

Royal Dutch Shell declared force majeure on exports of Nigeria’s Bonny Light crude due to the shutdown of one of the two export pipelines.  The force majeure declaration went into place on September 16th following the shutdown of the Nembe Creek Trunk Line. 

Colonial Pipeline said that Port Arthur, Texas refiners can use their own pumps as a temporary solution to get gasoline and other products into its main lines.  Traders said that while Colonial’s move may help resume shipments from Port Arthur, flow rates through the line overall would still likely remain low until repairs are complete.  Repairs at the Port Arthur injection point are expected to last through the end of the month. 

Bloomberg reported that total US waterborne LPG exports from Houston, Port Arthur, Philadelphia and Seattle increased by 85% on the week to 1.12 million bpd in the week ending September 14th.  It reported that exports from Houston increased by 191% to 983,637 bpd. 

JBC Energy said the price of Brent crude may rise to $60/barrel on sentiment and a short squeeze, but sustaining the price at that level is a different story, with fundamentals justifying prices between $50-$55/barrel. 

The EIA stated that shale oil production from seven major US oil plays is expected to see a monthly increase of 79,000 bpd to 6.083 million bpd.  Oil output from the Permian Basin is expected to see the largest increase, with an increase of 55,000 bpd.  Oil output at Eagle Ford shale play is expected to fall by 9,000 bpd. 

ExxonMobil Corp may restart most of the production units at its 362,300 bpd Beaumont, Texas refinery by the end of the week after the refinery was shut on August 30th due to Hurricane Harvey.  The refinery’s two crude distillation units resumed operations on Friday.  It also restarted its 40,000 bpd diesel hydrotreater.  Its 65,000 bpd hydrocracking unit was restarted on Sunday.  The refinery’s 45,000 bpd coking unit is expected to achieve full production levels by the last week of September. 


Early Market Call - as of 9:00 AM EDT

WTI - Oct  $50.30, up 40 cents

RBOB - Oct $1.6659, down 32 points

HO -Oct $1.7888, up 89 points
 

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Oil market posted inside trading day on Friday after trading higher throughout the week

September 18, 2017

Recap: After trading higher for four consecutive sessions, the oil market posted an inside trading day on Friday.  The market traded in and out of positive territory as the market consolidated following the market’s strong gains while traders took profits ahead of the weekend.  The crude market posted a low of $49.41 in overnight trading and rallied to a high of $50.13 early in the session.  The market later erased some of its gains and traded in a 40 cent trading range during the remainder of the session.  The October WTI contract ended the session flat at $49.89 but gained about 5.1% on the week.  The November Brent settled up 15 cents at $55.62.  Meanwhile, the product markets ended the session in positive territory, with the heating oil market settling up 2.13 cents at $1.7988 and the RBOB market settling up 3.3 cents at $1.6617.

Fundamental News: Baker Hughes reported that the number of rigs searching for oil in the week ending September 15th fell by 7 to 749, the lowest level since the week ending June 16th.  US drillers cut the most oil rigs in the week since January.

Phillips 66 chartered a foreign flagged vessel carrying a gasoline cargo this week.  It was making use of a temporary waiver of the Jones Act that was put in place to meet fuel shortages in the wake of Hurricane Harvey and Irma.  The vessel departed from Houston, Texas on September 9th and was docked near the company’s Alliance refinery in Louisiana.

China’s Unipec is shipping its first Very Large Crude Carrier cargo of diesel from China to Europe.  This is part of the company’s plans to expand into Europe as China looks to new markets for its excess fuel. 

Colonial Pipeline Co is allocating space for Cycle 54 shipments on Line 1, its main gasoline line from Houston, Texas to Greensboro, North Carolina.

Oil Movements reported that OPEC shipments are expected to fall by 280,000 bpd to 23.93 million bpd in the four weeks ending September 30th compared with the previous four week period ending September 2nd. 

A BNP Paribas oil strategist reported that non-OPEC total supply growth for 2018 is now seen at 1.5 million bpd, rather than 1.4 million bpd. 

JBC Energy forecast that US crude exports are likely to increase beyond 1 million bpd on a weekly basis within the next few weeks to a new high in October, as seasonal refinery maintenance is expected to free up more crude for export.  Volumes will continue increasing as the wider Brent/WTI spread had improved arbitrage economics out of the US Gulf and can offset costs of lightering crude to VLCCs. 

IIR reported that US oil refiners are expected to shut in 2.429 million bpd of capacity in the week ending September 15th, increasing available refining capacity by 1.227 million bpd from the previous week.  IIR expects offline capacity to fall to 1.144 million bpd in the week ending September 22nd. 

According to Bloomberg, global refinery outages reached 4.77 million bpd on Friday.  It  is down from 5.6 million bpd the previous week as the impact of Hurricane Harvey continues to recede.  US outages totaled 2.4 million bpd, compared with 3.2 million bpd over the same period.

North Dakota’s Industrial Commission reported that oil production in the state increased by 15,000 bpd to 1.048 million bpd in July. 


Early Market Call - as of 9:00 AM EDT

WTI - Oct  $49.67, down 22 cents

RBOB - Oct $1.6627, up 5 points

HO -Oct $1.7825, down 1.63 cents


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Oil market continued to build on gains made on Wednesday

September 15, 2017

Recap: The oil market on Thursday continued to trend higher and posted a high not seen since August 1st, building on solid gains made on Wednesday.  The market remained supported a day after the IEA forecast that the oil market would continue to tighten as fuel demand increased.  It revised up its 2017 world oil demand growth to 1.6 million bpd from a previous estimate of 1.5 million bpd.  The crude market extended its gains to $1.20 as it rallied to a high of $50.50 early in the session.  It later erased some of its gains during the remainder of the session, trading back towards the $49.50 level.  The October WTI settled up 59 cents or 1.2% at $49.89 and the November Brent settled up 31 cents or 0.56% at 55.47.  Meanwhile, the product markets were mixed, with the heating oil market settling up 90 points at $1.7775 and the RBOB market settling down 1.86 cents at $1.6287.

Fundamental News: According to the EIA’s International Energy Outlook for 2017, global demand for petroleum and other liquid fuels will increase by nearly 20% by 2040, driven by the transportation and industrial sectors.  Consumption is expected to increase from 95 million bpd in 2015 to 104 million bpd in 2030 and 113 million bpd in 2040.  Countries outside the Organization for Economic Cooperation and Development account for most of the increase, with demand increasing by 1.3% per year.  Meanwhile, renewables will remain the world’s fastest growing energy source, with consumption increasing by an average 2.3% a year between 2015 and 2040. However, fossil fuels will remain the dominant energy source, accounting for 77% of energy use in 2040.  Global consumption of natural gas is expected to increase 1.4% annually.

Libya’s Sharara oilfield is producing about 180,000 bpd, 100,000 bpd below recent levels due to security issues.  Workers at the field said a facility about 25 miles west of the field was shut due to poor security, hindering the recovery of production since the field reopened after a pipeline blockade this month. 

Kazakhstan’s President, Nursultan Nazarbayev, said the country will support future efforts to increase the price of crude.  He said the price of Brent at $52-$55/barrel, satisfies everyone and added that the country will maintain its solidarity in order to support the price. 

BP’s Chief Executive, Bob Dudley, said oil prices are expected to hold between $50 and $60/barrel as high global stocks fall following the OPEC and non-OPEC output cut agreement. 

US Secretary of State, Rex Tillerson, said he was hopeful that China would come to its own decision to use the “powerful tool” of oil supplies to persuade North Korea to reconsider its current path towards weapons development and its approach to talks and negotiations in the future. 

Venezuela’s Economy Vice President, Ramon Lobo, said the country will make all pending debt payments despite a series of difficulties that have arisen as a result of financial sanctions by the US.  The sanctions did not block banks from serving as intermediaries in debt payments, but the government of President Nicolas Maduro has stated that they are interfering with the country’s finances and threatening to lead it toward default. 

Gasoline stocks held in independent storage in the Amsterdam-Rotterdam-Antwerp terminal in the week ending September 14th fell by 4.8% on the week but increased by 8.89% on the year to 833,000 tons.  Gasoil stocks fell by 3.87% on the week and by 18.12% on the year to 2.634 million tons while its fuel oil stocks fell by 14.87% on the week but increased by 75.12% on the year to 1.265 million tons. 

 

Early Market Call - as of 9:00 AM EDT

WTI - Oct  $49.82, down 7 cents

RBOB - Oct $1.6417, up 1.3 cents

HO -Oct $1.7886, up 1.08 cents


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Oil prices rose despite a reported increase of U.S. crude oil inventories

September 14, 2017

Recap: Oil prices rose on Wednesday despite a larger than expected build in U.S. crude oil inventories. According to the EIA, crude stocks increased 5.9 million barrels, much greater than the expected 3.2 million barrels. Overshadowing the EIA report, was another report put out by the International Energy Agency, stating that the global surplus was showing signs of waning, while at the same time, output by OPEC and some other major producers was decreasing. While this was supportive for prices, the increase in U.S. stockpiles kept a lid on prices. October WTI gained $1.07, or 2.22%, to settle at $49.30, while Brent for November delivery settled at $55.16, up 89 cents or 1.64%.

October RBOB fell about a penny to $1.647 a gallon, while October heating oil added 2.8 cents, or 1.6%, to $1.769 a gallon.

Fundamental NewsThe IEA reported that the global oil surplus is beginning to deplete due to stronger than expected European and US demand growth, as well as production declines in OPEC and non-OPEC countries.  It raised its 2017 global oil demand growth estimate to 1.6 million bpd from 1.5 million bpd.  It stated that increased demand in industrialized countries was a key factor behind global demand increasing by 2.3 million bpd in the second quarter, the highest quarterly year on year increase since mid-2015.  In regards to supply, global oil production fell by 720,000 bpd in August due to unplanned outages and scheduled maintenance in Libya as well as non-OPEC countries such as Russia, Kazakhstan, Azerbaijan, Mexico and in the North Sea.  It was the first decline in global production in four months.  OPEC’s oil output fell in August by 210,000 bpd to 32.67 million bpd.  The 12 OPEC members bound by the output cut agreement increased their compliance to 82% in August from 75% in July.  OECD commercial stocks were unchanged in July at 3.016 billion barrels.  The IEA also stated that for the third quarter, its refinery throughput forecast was revised down by 700,000 bpd due to Hurricane Harvey’s impact.  This resulted in a global refined product undersupply for the second consecutive quarter.  In the fourth quarter, refinery throughput is expected to reach 80.9 million bpd as refiners respond to higher margins in the tight product markets.

Kuwait’s Oil Minister, Essam al-Marzouq, said that OPEC could hold an extraordinary meeting in mid-March if it does not reach a decision to extend oil supply cuts when it next meets in November.  Meanwhile, Venezuela’s Oil Minister, Eulogio Del Pino, said that all options are open regarding the global cuts agreement, which is expected to in March 2018.  He also said his country would price is crude oil sales in currencies other than the US dollar, such as the Chinese yuan and Indian rupee. 

The Wall Street Journal reported that although no countries have publicly challenged Saudi Arabia’s Oil Minister, Kalid al-Falih, shift in rhetoric that all option are open in OPEC’s efforts to rebalance world oil markets, OPEC ministers see cutting exports as a tough sell.  

Iran’s Oil Ministry news site, SHANA, said Iran will take any necessary steps to ensure the stability of the oil market after meeting his Venezuelan counterpart, Eulogio Del Pino in Tehran.  They discussed a possible extension of the OPEC supply cuts until June 2018.

IIR reported that US oil refiners are expected to shut in 2.156 million bpd of capacity in the week ending September 15th, increasing available refining capacity by 1.426 million bpd in the previous week.  IIR expects offline capacity to fall to 608,000 bpd in the week ending September 22nd. 

 

Early Market Call - as of 9:00 AM EDT

WTI - Oct  $49.90, up 60 cents

RBOB - Oct $1.6473, unchanged

HO - Oct $1.7797, up 1.13 cents

 

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Oil prices rose after OPEC incresed their demand forecast for 2018

September 13, 2017

Recap:  Oil prices rose after OPEC reported a decline in production for the month of August, as well as increased their demand forecast for 2018. Prices drifted higher within a narrow range, under moderate volume. October WTI held above the 50-day moving average of $47.56 and gained momentum above $47.85, the 10-day moving average, to achieve a high of $48.44. Gains were pared, with this spot contract settling at $48.23 a barrel, up 16 cents, or 0.33%. Brent closed up 34 cents, or 0/80%, to settle at $54.27 a barrel.  

October RBOB gained 2.18 cents, or 1.38%, to settle at $1.6563 a gallon, while October heating oil settled at $1.7406 a gallon, down .0021 cents, or 0.12%.

Fundamental News Bloomberg reported that crude oil stocks held in Cushing, Oklahoma increased by 1.6 million barrels to 59.63 million barrels in the week ending September 8th.

OPEC and its allies are discussing extending the oil production cuts that expire in March 2018 by more than three months, potentially bringing them well into the second half of next year.  One option under discussion is a six-month extension. 

Russia’s Energy Minister, Alexander Novak, met with his Venezuelan counterpart, Eulogio Del Pino, on Tuesday to discuss a global deal to limit oil output. 

In its monthly report, OPEC raised the estimate for the amount of crude it will need to supply next year amid a stronger outlook for global oil demand.  It increased its 2018 forecast by 400,000 bpd to 32.8 million bpd on increased demand estimates for Europe and China.  OPEC increased its global oil demand estimates for 2015 through 2018.  It raised its 2018 forecast by 400,000 bpd to 98.1 million bpd.  As a result, the growth rate expected for next year also increased by about 100,000 bpd to 1.35 million bpd.  It reported that non-OPEC oil production in August fell by 320,000 bpd on the month to 57.68 million bpd.  US oil output fell by 70,000 bpd as production from the Gulf of Mexico and parts of Eagle Ford was partially disrupted by Hurricane Harvey.  OPEC oil production averaged 32.76 million bpd in August, down 79,000 bpd on the month.  Crude output increased in Nigeria, while production fell in Libya, Gabon, Venezuela and Iraq.  OPEC’s compliance with its output cut pledge stands at 83%, down from 86% initially reported for July. 

In its Short Term Energy Outlook, the EIA cut its 2017 world oil demand growth forecast by 70,000 bpd to 1.35 million bpd.  However, it increased its oil demand growth estimate for 2018 by 80,000 bpd to 1.69 million bpd.  World oil demand in 2017 and 2018 is estimated to total 98.26 million bpd and 99.95 million bpd, respectively.  It reported that OPEC production in 2017 is expected to decline by 200,000 bpd to 32.49 million bpd and increase by 500,000 bpd to 32.99 million bpd in 2018.  Meanwhile, total US petroleum demand in 2017 is expected to increase by 350,000 bpd to 19.98 million bpd and increase by 40,000 bpd to 20.38 million bpd in 2018.  Gasoline demand in 2017 is expected to remain unchanged at 9.33 million bpd but increase by 40,000 bpd to 9.37 million bpd in 2018.  Distillate demand in 2017 is estimated to increase by 110,000 bpd to 3.99 million bpd and increase by 80,000 bpd to 4.07 million bpd in 2018. 

Pemex has ordered a record 619,000 bpd of gasoline in September, as there is no restart date for its Salina Cruz refinery while Houston area refiners are still attempting to fully resume operations. 


Early Market Call - as of 9:00 AM EDT

WTI - Oct $48.74, up 51 cents

RBOB - Oct $1.6546, down 15 points

HO - Oct $1.7477, up 69 points


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Oil prices continued to fall as traders evaluated impact of Hurricane Irma on demand

September 12, 2017

Recap: Oil prices began Monday’s session with an extension of Friday’s losses as traders evaluated demand destruction caused by Hurricane Irma. WTI fell to $47 a barrel, its lowest level in a week, while Brent created a double bottom around $53 a barrel. Losses were eradicated after news broke that Motiva had restarted production at its Port Arthur, TX refinery. Prices climbed above unchanged, in what was a moderately traded session. October WTI gained 59 cents, or 1.27%, to settle at $48.07 a barrel, while November Brent tacked on 6 cents, or 0.11%, to settle at $53.84 a barrel.

October RBOB fell 1.3 cents, or 0.8%, to $1.635 a gallon, while October heating oil settled at $1.743 a gallon, down 2.3 cents, or 1.3%.

Fundamental NewsSaudi Arabia’s Energy Minister, Khalid al-Falih, agreed with his Venezuelan and Kazakh counterparts to leave all options open in their effort to rebalance world oil markets, including the possible extension of output cuts beyond next March.  Separately, Saudi Arabia’s Energy Minister agreed with his UAE counterpart, Suhail al-Mazroui, that an extension of an agreement on global oil supply cuts beyond March 2018 may be considered depending on market fundamentals. 

Saudi Arabia will supply full contracted volumes of crude to at least five north Asian term buyers in October, while a sixth regional refiner was notified of cuts to its October Arab Extra Light supplies.  The October allocations are in contrast to the steep cuts in the September allotments and reaffirms the country’s desire to maintain its Asian market share.  Saudi Arabia plans to cut crude allocations to its customers worldwide in October by 350,000 bpd.   

Saudi Aramco will add 1.9 million barrels or 300,000 kiloliters of crude to storage that it holds in Japan.  The move comes as Japan from this month raises the crude storage capacity that it lends for free to Saudi Aramco by 30% to 8.2 million barrels.  The extra storage will help Saudi Arabia as it battles to keep customers in northern Asia.  In return for providing free storage on the southern islands of Okinawa, Japan gets a priority claim on the stockpiles in case of an emergency.  Saudi Arabia currently holds a total of 6.3 million barrels of crude in Japanese storage. 

According to Bloomberg, total US waterborne LPG exports from Houston, Port Arthur, Philadelphia and Seattle increased by 986.4% on the week to 610,507 bpd in the week ending September 7th. 

Euroilstock reported that the crude intake at Europe’s refineries fell in August by 2% on the month and by 2.4% on the year to 10.514 million bpd.  European crude and oil products stocks in August increased by 0.4% on the month but fell by 1.4% on the year to 1.149 billion barrels.  European crude oil stocks in August fell by 0.4% on the month but increased by 1.1% on the year to 495.6 million barrels while its gasoline stocks increased by 2.6% on the month but fell by 0.4% on the year to 114.16 million barrels and its middle distillates stocks increased by 1.1% on the month but fell by 3% on the year to 445.73 million barrels.  European fuel oil stocks fell by 0.2% on the month and by 10.2% on the year to 69.03 million barrels in August while naphtha stocks fell by 5.2% on the moth but increased by 1.8% on the year to 24.2 million barrels in August. 

RBC Capital Markets cut its oil forecasts by about $6/barrel for 2018 and said caution is needed.  It sees WTI averaging $49.30/barrel this year and $53/barrel next year and Brent at $52.50/barrel in 2017 and $55.50/barrel next year. 

JBC Energy said deep cuts in Saudi crude shipments to the US in October may be a logistical response as Gulf Coast refiners will probably have a backlog of crude after runs were halted or reduced in August and September after Hurricane Harvey hit Texas. 
 

Early Market Call - as of 9:00 AM EDT

WTI - Oct  $48.19, up 13 cents

RBOB - Oct $1.65007, up 1.64 cents

HO -Oct $1.7419, down 2 points


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Oil prices continued to fall on Friday and hit their lowest level in a week

September 11, 2017

Recap: Oil prices continued to tumble on Friday, even after Baker Hughes reported U.S. oil rigs were cut for the third time in four weeks. U.S. prices fell by almost 4% during trading, and finished at their lowest level in a week. Brent, although coming under pressure, posted only modest losses. October WTI settled at $47.48 a barrel, down $1.61, or 3.28%. Brent for November delivery slipped 71 cents, or 1.30%, to settle at $53.78 a barrel.

Brent backwardation continued to gather momentum at the front-end of the curve, as the January-February18 spread traded in positive territory on Friday, following the November-December17 spread, which moved into backwardation on Wednesday. The November-December17 spread settled at 20 cents premium to the November, while the January-February spread settled at 11 cents premium to the January, which represents an increase of 116.7% on the week.  

October RBOB fell 1.3 cents, or 0.8%, to settle at $1.648 a gallon. This was down 5.7% on the week. Meanwhile, October heating oil lost 2 cents, or 1.1%, to settle at $1.766 a gallon, down 1.1% on the week.

Fundamental News: Refiners including ExxonMobil and Motiva Enterprises purchased fuel on Thursday to compensate for lost output from refineries that were shut due to Hurricane Harvey.  The purchases sparked concern in the market that the hurricane may have caused damage on refineries that will take time to repair.  The increase in buying also came as refiners scrambled to meet the deadline to ship on the Colonial Pipeline during the five-day period through Thursday.  It is unclear how much fuel is moving through the pipeline currently.  Exxon said it was completing minor repairs at its Baytown refinery and was working to ensure customers were well supplied with gasoline.  Meanwhile, Motiva aims to have its 603,000 bpd Port Arthur refinery running at 40% of capacity by Monday.

Royal Dutch Shell said it suspended some of its well operations and reduced staff at its eastern Gulf of Mexico assets as a precautionary measure ahead of Hurricane Irma.  The company said there was currently no impact on production. 

Venezuela’s Oil Minister, Eulogio Del Pino, said global oil inventories remain too high and called on OPEC and other producers to review their global output cut agreement in order to support the sector.  He said OECD oil inventories, standing at about 3 billion barrels, were still 300 million barrels above the level he considered balanced and normal.  He urged producers to look at the exemptions granted to countries such as Libya and Nigeria in the output reduction deal and the effect those exemptions have on the market.  He said he would discuss the matter with his Russian and Middle Eastern counterparts in the near future.  He also added that oil ministers from Libya and Nigeria were prepared to attend a ministerial meeting this month. 

Russia’s Finance Minister, Anton Siluanov, said Russia would benefit from extending the agreement with OPEC to limit its oil production.  He said extending the deal would be beneficial for all involved.  Separately, Russia’s Finance Minister said Venezuela is having problems with fulfilling its obligations on its debt to Russia.  Venezuela owed Russia $2.84 billion as of September last year.   

IIR reported that US oil refiners are expected to shut in 3.619 million bpd of capacity in the week ending September 8th, reducing available refining capacity by 353,000 bpd from the previous week.  IIR expects offline capacity to fall to 2.346 million bpd in the week ending September 15th. 


Early Market Call - as of 9:00 AM EDT

WTI - Oct  $47.36, down 11 cents

RBOB - Oct $1.6138, down 3.47 cents

HO -Oct $1.7330, down 3.26 cents

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Oil prices traded lower after EIA reported first build in US crude oil inventories in 10 weeks

September 08, 2017

Recap: Oil prices traded lower in a narrow range after the EIA reported the first build in U.S. crude oil inventories in 10 weeks. With demand hampered by Hurricane Harvey, stockpiles increased by 4.6 million barrels; expectations were calling for an increase of 4 million barrels. In what was a lackluster day, October WTI squeezed out a 7 cent gain, to settle at $49.09 a barrel, while Brent for November delivery settled at $54.49 a barrel, up 29 cents.

Heating oil crack spreads have been on the rise due to recent refinery closures. A hefty margin on near term cracks is totally understandable, what is not however, is the strength seen in the Cal18 heating oil crack spread. This spread began its ascent back in June, as political turmoil in Venezuela led to a decline in refinery operations, while at the same time; Mexico was experiencing operation problems with its Salina Refinery. The recent closure of refineries has catapulted this spread to an unseasonable high of $20.54. Due to a time factor, we could see this spread implode, falling back toward $15 a barrel, the level it was at prior to its ascent. 

Fundamental News: The EIA reported that US refinery utilization rates fell by 16.9% to 79.7% in the week ending September 1st, the lowest rate since 2010.  US Gulf Coast utilization rates fell to 63.4%, the lowest rate since the EIA began collecting data in 2010.  US refinery crude runs fell by 3.3 million bpd to 14.5 million bpd on the week.

Truckers who hauled gasoline to Texas last week from Florida may run the same route in reverse next week due to Hurricane Irma, which is expected to make landfall in Florida late Sunday.  According to GasBuddy, 43% of stations in the Miami-Fort Lauderdale area were out of fuel on Thursday, it is up from 26% on Wednesday.  In both Gainsville and the West Palm Beach-Fort Pierce area, more than 30% of stations are dry.  

Hurricane Irma has shut down oil terminals across the northern Caribbean, worsening a fuel supply crunch in Latin America which is struggling to meet demand since Hurricane Harvey disrupted shipments from the US Gulf Coast.  Latin America has been scrambling for almost two weeks to find cargoes due to Harvey.  Hurricane Irma is threatening Caribbean refineries, terminals and storage facilities.  More than 100 million barrels of storage is available in the Caribbean. 

The US EPA issued waivers on certain federal requirements for the sale, production and blending of gasoline to avoid supply shortfalls in the aftermath of Tropical Storm Harvey and as Hurricane Irma approaches Florida. The EPA said winter-grade gasoline will be allowed to be sold through September 15th in most states throughout the country other than those on the West Coast and in the Rocky Mountains.  It also temporarily waived federal requirements covering the production and blending of winter gasoline through September 26th. 

According to the Bloomberg, a total of 38 tankers, with a capacity of about 23.3 million barrels of in-bound crude or oil product, were drifting off the US Gulf Coast in the aftermath of Hurricane Harvey. 

TransCanada has started up a segment of the southern leg of its 600,000 bpd Keystone crude pipeline system shut down due to Hurricane Harvey. 

Bloomberg reported that while about 2.4 million bpd or 13% of US refining capacity has restarted or is restarting operations, about 12% of the country’s processing capability is still halted.  Meanwhile, Goldman Sachs estimates that about 2 million bpd of capacity could remain shut in beyond Thursday, with at least 1.4 million barrels expected to remain shut past the middle of the month. 


Early Market Call - as of 9:45 AM EDT

WTI - Oct  $48.97, down 12 cents

RBOB - Oct $1.6610, unchanged

HO -Oct $1.7917, up 56 points


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Oil prices hit 4-week high as the US prepares for Hurricane Irma's impact on oil production

September 07, 2017

Recap:  Oil prices climbed to a 4-week high, as the southeastern part of the U.S. gears up for Hurricane Irma and its impact on oil production. Refineries, which had been shuttered by Hurricane Harvey, are slowly starting to come back online, increasing demand for crude oil.  While OPEC, perhaps wanting to take advantage of the recent spike, has stated it is considering a rollover of production cuts. Both added to the rise in prices.  October WTI gained 50 cents, or 1.03%, to settle at $49.16 a barrel, while Brent for November delivery settled at $54.20 a barrel, up 82 cents, or 1.54%.

After reaching a 2-year high last week, RBOB fell for the third time on four days. October RBOB fell .0258 cents, or 1.5%, settling at $1.6733 a gallon, while October heating oil tacked on .0115 cents, or 0.65%, to settle at 1.7595 a gallon.

Fundamental News:  According to Bloomberg, crude stocks held in Cushing, Oklahoma increased by 1 million barrels to 58.23 million barrels in the week ending September 1st. 

BP has started evacuating nonessential workers from its Thunder Horse platform in the Gulf of Mexico ahead of Hurricane Irma.  Production has not been shut in. 

Kuwait’s Oil Minister, Essam al-Marzouq, said global oil producers will be able to decide in November whether to further extend their agreement on output cuts beyond March 2018 or begin to phase it out from that date.  OPEC is scheduled to meet in November to discuss the issue.  He also stated that he expects Brent crude to average between $50 and $55/barrel through the end of the year.  He also predicted that oil demand would increase in the current quarter while inventories would fall more than expected. 

Russia’s Energy Minister, Alexander Novak, said he expects the 2018 price of Brent to trade in a range from $45/barrel to $55/barrel.  He also stated that he does not rule out that the OPEC/non-OPEC group may consider changes to the existing terms of the production cut agreement if there is a decision on its new extension.  He confirmed that Russia and Saudi Arabia have discussed a potential extension of the deal for a further three months beyond March 2018 but said it was too early to speak about concrete details now, with a final decision likely to be closer to the date when the current agreement expires. 

Libyan oil sources stated that production at Libya’s Sharara oilfield was gradually restarting on Wednesday after the lifting of a pipeline blockade.  The Sharara oilfield was producing up to 280,000 bpd until it was forced to shut down because of a pipeline blockade on August 19th.  The blockade was lifted on Tuesday at a valve near the western town of Zintan, on the pipeline leading from the field to Zawiya terminal. 

Genscape reported that the volume of oil flowing in South Texas reached 1.374 million bpd on September 4th, as the region continues to recover from Hurricane Harvey.  About 70,000 bpd of oil production was shut in as of September 5th from as much as 700,000 bpd on August 28th.   

Several bookings for oil product tankers from Asia to the US and Latin America have been cancelled as traders have not been able to find spot supplies to fill them and as demand has declined.  About one-third of the estimated 25 vessels that were provisionally booked to load 800,000 tons of jet fuel, diesel and gasoline from North Asia and Singapore to head to the West Coast of the US and to countries such as Mexico, Chile and Guam have been cancelled. 

Bloomberg reported that preliminary US waterborne crude imports fell by 1.01 million barrels to 3.1 million bpd in the week ending August 31st. 


Early Market Call - as of 9:00 AM EDT

WTI - Oct $48.94, down 23 cents

RBOB - Oct $1.6871, up 1.37 cents

HO - Oct $1.7750, up 1.54 cents


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Gasoline prices moved lower as Hurricane Irma is expected to have negative effect on demand

September 06, 2017

Recap: With Hurricane Irma expected to have a negative effect on demand, gasoline prices plunged to pre-Harvey levels. October RBOB fell as much as 5.14% in overnight trading, reaching a low of $1.6579 a gallon. Losses were pared, as weather forecasts changed, putting Irma smack through the middle of Florida. October RBOB settled at $1.6991 a gallon, down 4.9 cents, or 2.8%. October heating oil fell less than half a cent, to settle at $1.748 a gallon.

With some of the refineries in hard hit areas of Texas slowly coming back online, crude oil prices rose to their highest level since August 14th. October WTI settled at $48.66 a barrel, up $1.37, or 2.9%. This was the highest settlement for a spot contract in three weeks. November Brent settled at $53.38 a barrel, up $1.04, or 2%.  

Fundamental NewsOPEC’s Secretary General, Abdallah Salem el-Badri, said OPEC will continue its ongoing efforts to ensure much needed stability in the oil market, to contribute to mitigating any disruption to current or future supply following Hurricane Harvey.

Russia’s Energy Minister, Alexander Novak, said Russia and Saudi Arabia discussed extending the OPEC/non-OPEC output cut agreement although no specific decisions have been taken. 

Iran’s Oil Minister, Bijan Namdar Zanganeh, said OPEC compliance with planned supply cuts has not lessened.  He said OPEC members’ compliance with the agreement to cut output has increased in recent months.  He said he believed the market was balanced.  He said non-OPEC cooperation is good, especially from Russia. 

Royal Dutch Shell said well operations have restarted after a full rig inspection at the Perdido oil platform in the US Gulf of Mexico, which was shut due to Tropical Storm Harvey.  There is no timeline yet for a restart of production, which will begin after all inspections are complete and the pipelines and refineries are back on line to accept product. 

ConocoPhillips said its oil production in the Eagle Ford shale region reached about 50% of its pre-hurricane capacity of 130,000 bpd of oil equivalent, and is expected to reach 80% by Tuesday evening. 

Enterprise Products Partners LP made significant progress in restoring service at all of its major assets impacted by Hurricane Harvey. 

Colonial Pipeline Co restarted Line 2 between Houston, Texas and Lake Charles, Louisiana and its main gasoline line, Line 1, from Pasadena, Texas to Houston. 

Valero Energy Corp asked federal regulators to allow or direct Colonial Pipeline Co to lift gasoline grade requirements in the wake of Hurricane Harvey.  It said Colonial’s move to restrict the grades of gasoline flowing on its system is inconsistent with the intended effect of the US EPA’s emergency fuel waivers for 38 states and Washington DC after the hurricane shut refineries and caused an increase in gasoline prices. 

Pemex said Hurricane Harvey forced the cancellation of several crude oil export shipments.  Due to the damage inflicted by the hurricane on the US Gulf Coast refining center, Pemex arranged for alternative gasoline and diesel cargos from suppliers elsewhere. 


Early Market Call - as of 9:00 AM EDT

WTI - Oct  $49.28, up 63 cents

RBOB - Oct $1.6759, down 2.32 cents

HO -Oct $1.7606, up 1.27 cents

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