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Refined Products

Recap:  Oil markets were mixed upon yesterday's close after the entire oil complex had been down early in Monday's trading. The products were mixed: NYMEX ULSD (HO) moved down 9 points to settle at $2.7396 (after a low of $2.7258), and NYMEX RBOB (Gasoline) finished up 1.20 cents to $2.5308, but had been as low as $2.4950. The next RBOB futures contract, November, settled at $2.4776, pushing the premium (backwardation) up on the current October RBOB contract to 5.32 cents ($2.5308 - $2.4776) vs. November, and up 42% since last week. The crudes were mixed as well, as NYMEX (WTI) Crude turned higher after the current October futures contract hit a low on the day of $90.63 and the November futures contract hit a low of $89.76! October NYMEX Crude settled up 65 cents to $92.92 and November NYMEX Crude settled up 62 cents to $91.99. Some analysts believed the turnaround was due to profit taking after the recent slide down. However, ICE Brent Crude continued its momentum lower as the October futures contract expired and settled down 46 cents to $96.65, and the incoming November futures contract settled down 8 cents to $97.88. 

 Currently, oil markets are down across the board: NYMEX ULSD is down 98 points to $2.7298, NYMEX RBOB is down 8 points to $2.5300, NYMEX Crude is down 38 cents to $92.54, and ICE Brent is down 26 cents to $97.26. "A waning appetite for oil in China, one of the world's biggest consumers, is also a worry, 'Adding to the bearish cocktail were soft industrial output data from China and the perennial fears of an imminent rise in U.S. interest rates,' PVM wrote in a note to clients." (Dow Jones 9-16-14) 

Brent-WTI Spread is shrinking ... The October Brent-WTI spread finished at $3.73 while the November Brent-WTI spread finished under $6 at $5.89. The significance of the shrinking Brent Crude - WTI Crude spread is that as it continues to narrow, the appetite for refiners to export products to Latin America, Europe and/or West Africa shrinks as the cost of longer distance transportation erodes the additional margin to be made. Said another way, the Brent-WTI arbitrage or arb window closes and U.S. refiners looking to export may seek closer, domestic markets for their refined products. As noted yesterday with Northeast distillate inventory stocks low, the opportunity to lure some distillate barrels back to PADD 1A (New England) and PADD 1B (Central including New York) would be welcomed as East Coast refiners have reduced their operable utilization last week for a third week in a row from 82.2% to 81%, a decline of 1.2 percentage points as compared to last year’s 90.1% rate. Contributing to Northeast distillate supply concerns, Oil & Gas Journal reported that Irving Oil Ltd. started an 8-week fall turnaround at its 250,000 barrel-per-day refinery in St. John, New Brunswick, Canada. "The annual fall turnaround, which will cost about $20 million (Can.), is intended to enhance the safety and reliability of the refinery and will involve over 2,000 workers working 24 hr/day, 7 days a week for the duration of the maintenance period, the company said on Sept. 15." (OGJ 9-15-14) We will be looking for weekly DOE inventory data Wednesday to see if Northeast distillate stocks get a boost.
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Natural Gas

On Monday September 15th, the front month NYMEX Natural Gas Futures Contracts opened at $3.942, almost nine cents above Friday’s closing price.  After reaching the intraday high of $3.952 during the opening hour, prices started to fall.  By 9:20AM, October had slipped to $3.923.  Prices then inched up and drifted sideways within a narrow band between $3.92 and $3.95 before sliding to the intraday low of $3.901 around noon.  The afternoon trading hours saw October recover and seesaw along the $3.92 mark into the close.  October closed at $3.930 on Monday.

This morning in Globex, WTI Crude was down 37 cents; Natural Gas was down almost five cents; and, both Heating Oil and Gasoline were down slightly. 

Both New England and New York cash prices were up.

Natural Gas Glossary

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