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MarketWatch

Refined Products
4.18.2014

Recap: Oil markets started in lower territory yesterday morning and steadily moved higher until results of the Ukraine-Russia Geneva talks revealed an agreement that "requires all sides to refrain from violence, intimidation or provocative actions." (Reuters) The tentative agreement tabled Western economic sanctions in the short term, and oil markets moved off of their highs on the day and moved lower into the close. There was a mixed finish with NYMEX Crude finishing up 54 cents to 104.30, ICE Brent settled down 7 cents to 109.53, NYMEX ULSD (HO) down 24 points to 3.0082, but NYMEX RBOB was up 1.42 cents to 3.0547. Currently, due to Good Friday, the NYMEX and Globex are closed and will re-open at regular times for Monday's trading.

Driving season is upon us and after a harsh winter season, analysts have been anticipating that U.S. drivers will be eager to hit the roads. This holiday weekend will be a pre-test to this theory of pent-up demand, and according to the EIA's Summer Fuels Outlook released last week, forecasts for regular gasoline retail prices are to average $3.57 cents, a penny below the 2013 average of $3.58. (The summer driving season is from April to September.) The 2014 forecast and 2013 average are still more than 10 cents lower than the average 2011 and 2012 retail regular grade gasoline prices of $3.71 and $3.69, respectively. Recall, however, that the current backdrop of gasoline production has been transitioning from the winter grade to the summer grade material, and as the DOE Inventory Report revealed on Wednesday, U.S. gasoline stocks are down 5.1% since last year, and gasoline demand is up 2.8%. Since the beginning of April, NYMEX RBOB (Gasoline) futures have jumped from an April 1st close of 2.8697 to yesterday's close of 3.0547, an increase of 18.5 cents. Furthermore, just in the past week through April 14th, retail gasoline prices have jumped 5.5 cents from the previous week and 10.9 cents from the previous year (See EIA U.S. Regular Gasoline Prices chart below). As analyst Stephen Schork has been warning, there is significant concern over the geo-political issues in Venezuela, which could impact the import of intermediate/heavy sour crude oil, the crude feedstock to several key U.S. Gulf Coast refiners producing gasoline. Mexico supplied 44% of this sour crude feedstock, while Venezuela supplied 39%. In the April 16th edition of The Schork Report, Schork notes, "Thus, as we rev up for the driving summer, uncertainty remains regarding the availability of heavy sour crude from the second largest supplier to U.S. refineries in PADD 3."  We will continue to closely watch these supportive forces for gasoline prices.

Weekend Weather and HDD Planning: As April temperatures extend the heating season, Fax-Alert Weather Service has forecasted their Ten-Day Temperature Guidance report for the period April 16-April 26th.  And in most Northeast locations, we are colder-than-normal for this time of year! (HDD percentages above 100% indicate percentage increase of HDDs colder-than-normal temperatures):

New York:  NYC 98%, Binghamton 95%, Albany 105%, Newburgh 101%

New Jersey:  Newark 100%, Trenton 96%

Pennsylvania:  Philly  99%

Massachusetts:  Boston 110%, Worcester 104%, Chicopee 124%, Hyannis 110%

Connecticut: Hartford 114%, Bridgeport 108%, New Haven 107%

NH: Manchester 101%, Portsmouth 108%, Lebanon 101%, Concord, 104%

Maine: Portland 110%, Augusta 104%, Bangor 105%

Vermont: Burlington 107%, Rutland 105%

Rhode Island:  Providence 106%


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Natural Gas
4.18.2014

The May NYMEX Natural Gas Futures Contract opened at $4.537 on Thursday, just a hair above Wednesday’s closing price.  Prices drifted lower as traders waited on the EIA Storage Report.  At 9:50AM, May had sunk to $4.484 – the intraday low.  The report (details below) showed a measureable injection (24 BCF) but this was less than the Market expected and prices spiked to more than $4.71 as smaller current  injections mean more future demand for injections as we try to build inventory before winter sets in.  Prices kept climbing afterwards and peaked at $4.744 just before 12:30PM.  These high prices caused a sell-off and Natural Gas had shrunk back to the $4.71 level by 1PM.  A fresh round of buying elevated prices for the rest of the trading day and Thursday’s high of $4.746 was hit just before close.  Thursday closed at $4.741. In Globex, WTI Crude is up 54 cents, Natural Gas is up 21 cents, Heating Oil is flat and & Gasoline is up a cent.

The EIA Natural Gas Storage Report was published at 10:30AM and showed a net injection of 24 BCF for the week ended April 11.  This compares to a 24 BCF injection for this time last year and a five-year average injection of 38 BCF.  Total gas in storage is 850 BCF – 900 BCF lower than this time in 2013 and 1,012 less than the five-year average. 

New England and New York cash prices are both down significantly.

Natural Gas Glossary

For access to Sprague’s full Natural Gas Market Watch Report including commentary not posted here, please send your request to natgas@spragueenergy.com or call 1-855-466-2842

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