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MarketWatch

Refined Products
8.27.2015

Recap: Rbob plummeted 6 percent to an 8 month low following the 1.7 million barrel increase in U.S gasoline inventories. The increase in stocks came despite a reduction in refinery operations, adding to the bearish sentiment. Operations were slowed due to several refinery snags, making the slow-down in runs a temporary issue.  The price of turning a barrel of crude oil into gasoline also fell, with the spot contract hitting a six month low. The October Rbob/WTI spread began to slip in mid-August, and has fallen 39 percent to settle at $13.0852. October Rbob settled at $1.2306, down 6.29 cents. Heating oil for October delivery fell 1.24 cents to settle at $1.3983.

Trading between WTI and Brent was diverse as Brent traded to the upside and WTI succumbed to pressure from the unexpected stockpile increase in products. U.S. crude oil inventories fell 5.5 million barrels last week, the largest one-week drop since early June. Most of the decrease came from imports which fell 740,000 barrels per day. October WTI held within yesterday's range but settled lower on the day. An early attempt to trade higher was followed by a sharp sell-off after the release of the inventory numbers, with the October contract reaching a late session low of $38.52, before settling at $38.60, down 71 cents. Brent for October delivery lost 7 cents to settle at $43.14.

Fundamental News: The White House said that the Obama administration is focused on building enough support for the Iran deal to keep Congress from "spoiling" the agreement.

Platts reported that a sharp fall in VLCC rates, declining bunker prices and lower oil prices has prompted oil majors as well as trading houses to explore the possibility of taking ships on time charter for floating storage.

The Nigerian National Petroleum Corp cancelled the contract for the delivery of crude to the country's refineries in Warri, Port Harcourt and Kaduna. 

IIR reported that US oil refiners are expected to shut in 800,000 bpd of capacity in the week ending August 28th, up from 91,000 bpd in the previous week.  IIR also reported that offline capacity is expected to fall to 409,000 bpd in the week ending September 4th.  

Phillips 66 reported that a cooling tower collapsed at its 306,000 bpd Wood River, Illinois refinery on Tuesday.  A fluid catalytic cracking unit was shut and another was running at lower rates after the cooling tower collapsed.  Refinery workers may attempt to restart the catcracker within the next 48 hours.  The refinery is working to resupply cooling water to the impacted units from other cooling towers.

BP's Whiting, Indiana 240,000 bpd crude unit is operating at over 200,000 bpd after it resumed operations on Tuesday. 

Libya's eastern state oil company AGOCO, which runs the Hariga port and Sarir oil field, is producing 220,000 bpd, unchanged from last week.

Federal Reserve Bank of NY President William Dudley said the September rate increase is less appealing given the threat posed to the US economy by recent global market turmoil.  He hopes the Fed will however be able to increase rates in 2015.  He also stated that the global market turmoil may influence US employment prospects.

The Commerce Department reported that new orders for durable goods increased by a seasonally adjusted 2% in July from a month earlier.  It was the second consecutive increase. 

China's central bank said it injected 1490 billion yuan or $21.8 billion into the interbank money market via short term liquidity operations.  The loans, which mature in six days, have an average interest rate of 2.3%, according to the People's Bank of China. 

Early Market Call - as of 9:00 AM EDT

WTI - Oct $40.10, up $1.50

RBOB - Sep  $1.4320, up 7.71 cents

ULSD - Sep $1.4272, up 4.63 cents

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Natural Gas
8.27.2015

On Wednesday, August 26th, the front-month NYMEX Natural Gas Futures Contracts opened at $2.711, more than two cents above Tuesday’s closing price of $2.685.  Descending out of the starting gate, September marked the intraday high of $2.714 early on before falling to $2.687 at 9:20AM.  Climbing back above $2.700 thirty minutes later, prices then fell to the intraday low of $2.682 at 10:30AM.  Retracing this pattern over the next couple hours, the contract inched higher with each arcing pass, ascending to $2.708 shortly after 1:00PM. During the session’s final thirty minutes, September mustered one last ascent before withdrawing to close at $2.693 on Wednesday.

The EIA Natural Gas Storage Report is due out at 10:30AM today.  The report is expected to show a 63 BCF injection to storage for the week ended August 21st.  This compares to a 77 BCF injection at this time last year and a five-year average injection amount of 62 BCF.

This morning in Globex, WTI Crude was up $1.60; Natural Gas was down three cents; Heating Oil was up five cents; and, Gasoline was up almost six cents.

Additionally, cash prices were higher in New York and lower in New England.

 

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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