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Refined Products

Recap: Both Brent and WTI experienced an early morning jolt following a failed terrorist attack in New York’s highly traversed Times Square subway station. The higher move was accelerated by news of unplanned maintenance on the Forties pipeline in the U.K’s North Sea, which pushed Brent to its highest level in 2 ½ years. February Brent climbed steadily to a high of $54.85 a barrel, its highest level since January of 2015. This helped to widen Brent’s premium over WTI, pushing the spread between the February contracts to as wide as -$6.87, before settling at -$6.64. Brent for February delivery settled at $64.69 a barrel, up 1.29, or 2.03%, while January WTI tacked on $57.99 a barrel, up 63 cents, or 1.10%. 

Fundamental News:  UAE Energy Minister, Suhail bin Mohammed al-Mazroui, said that OPEC and non-OPEC oil producers plan to announce in June an exit strategy from global supply cuts, but added that it does not mean the pact will end by then.  He said it was premature to talk about the form or shape of such an exit strategy before June, when OPEC and non-OPEC producers are due to meet again. 

Kuwait’s Oil Minister, Essam al-Marzouq, said OPEC and other oil producers would study before June the possibility of an exit strategy from the global agreement. 

Saudi Arabia’s Energy Ministry reported that Saudi Aramco plans to reduce its January crude shipments to Asia by more than 100,000 bpd from December, while keeping its exports to the US and Europe steady.  Saudi Arabia plans to maintain its crude shipments in January at 6.9 million bpd. 

Goldman Sachs said it expects strong compliance from OPEC and other producers to global oil cuts through the first half of 2018.  The bank, however, sees OPEC and Russia’s combined output to increase 515,000 bpd in the second half of 2018, with its above-consensus demand forecast normalizing inventory levels by next summer.  Separately, Goldman Sachs reported that lower 48 crude production is expected to increase by 280,000 bpd in the fourth quarter compared with the previous quarter.   

Iraq’s Oil Minister, Jabar al-Luaibi, said that a deal signed with Iran to swap up to 60,000 bpd of crude produced from the northern Iraqi Kirkuk oilfield for Iranian oil is for one year and subject to renewal.  The agreement signed on Friday by the two OPEC countries provides for Iran to deliver to Iraq’s southern ports on the Gulf.  The deal in effect allows Iraq to resume sales of Kirkuk crude, which have been halted since Iraqi forces took back control of the fields from the Kurds in October. 

Euroilstock data reported that European refineries increased crude processing by 1.2% in November from the previous month but fell by 0.6% on the year to 10.575 million bpd.  European crude oil product stocks increased by 0.4% on the month but fell by 1.7% on the year to 1.114 billion barrels.  European crude stocks increased by 0.9% on the month but remained flat on the year at 479.9 million barrels, while gasoline stocks increased by 1% on the month but fell by 2.5% on the year to 113.56 million barrels and middle distillates stocks remained flat on the month but fell by 2.3% on the year to 429.08 million barrels. 

Crude oil running through the UK’s Forties Pipeline were still flowing at restricted rates on Monday following a leak detected last week.  The pipeline, which has an average daily

throughput of about 450,000 barrels of oil, had been operating at reduced capacity since December 7th.  Later, a spokesman said the pipeline is in the process of being shut down for repair work. The pipeline could shut down for weeks of unscheduled repair work.   

Early Market Call - as of 9:00 AM EDT

WTI - Jan $58.31, up 33 cents

RBOB - Jan $1.7511, up 2.48 cents

HO - Jan $1.9728, up 2.22 cents

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Natural Gas

Monday, December 11th saw the front-month NYMEX Natural Gas Futures Contracts open at $2.827, nearly six cents above Thursday’s closing price of $2.772.  Losing momentum after pre-market gains, prices slipped to the intraday low of $2.806 ahead of 10:00AM.  Regaining its footing, recently diminished prices and a short-term cold blast that will cover much of the east directed the contract upward.  Peaking at the intraday high of $2.841 by midday, January stabilized along $2.830 into the afternoon before closing higher on Monday at $2.828.

This morning in Globex, WTI Crude was up 38 cents; Natural Gas was up slightly; Heating Oil was up two cents; and, Gasoline was up two cents.  

Natural Gas Glossary

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