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Refined Products

Recap: Oil markets were down sharply Tuesday morning, but reversed higher with only January NYMEX Crude settling in positive territory, up only 2 cents to $55.93, after hitting a low of $53.60 on heavy volume. The January ICE Brent Crude futures contract stayed in negative territory all day, hitting a low of $58.50, as the January futures contract expired Tuesday under $60 at $59.86, down $1.20. With Brent down and WTI up, the Brent-WTI spread narrowed back below $4 to $3.73. The incoming February Brent futures contract settled at $60.01, down $1.20. Interestingly, the U.S. dollar ended up weakening against the yen and the euro yesterday because "’[t]he concern is that the decline in oil prices will be more persistent, and that this will start to hurt economies and change central banks' behavior,' said Sireen Harajti, foreign exchange strategist at Mizuho Bank." (Dow Jones 12-16-14) So as the U.S. Federal Reserve finishes its two-day FOMC meeting today, market participants will be waiting for post-meeting remarks from Fed Chair Janet Yellen around 2pm EST to see how much the collapse of the Russian ruble could play into their decision-making process. On the products side, NYMEX (HO) ULSD lost 4.17 cents to settle at an even $1.9600, but had hit an intra-day low of $1.9264. NYMEX RBOB (Gasoline) settled down 3.54 cents to $1.5410 after hitting a low of $1.5138.  

Currently,  oil markets are down across the board, reaffirmed by statements from not only OPEC but Russia that these top oil producers have no intentions of cutting production. "’The focus is on U.S. production as this is currently the key to the global oil balance,' said Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt. ‘With no signs that production growth will slow, prices will remain under pressure ... What we saw yesterday [in WTI] was a dead-cat bounce but the negative trends of oversupply and weaker demand growth are still persisting ... New lows can be expected and I wouldn't wonder if the market tests the $50 mark before the end of the year.'" (Dow Jones 12-17-14) NYMEX Crude is down $1.25 to $54.68, ICE Brent is down 95 cents to $59.06, NYMEX USLD down 1.12 cents to $1.9488, NYMEX RBOB is down 1.67 cents to $1.5243. All eyes will be on U.S. inventory data when the EIA releases its weekly DOE Inventory Report at 10:30am this morning. (see DOE inventory estimates below)  The American Petroleum Institute (API) reported their data yesterday afternoon and was bearish to WTI Crude. The API showed a crude stock increase of 1.9 MMbs (and a 2.7 MMb increase at Cushing, OK, the location where NYMEX WTI is priced) when expectations are for a seasonal tax-related inventory decline. API showed a decline in distillate stocks of 1MMbs, but an increase in gasoline stocks of 2.8 MMbs, both within in expectation ranges.

DOE Inventory Estimates: For the week ended December 12, 2014, Citi Futures is expecting the following increase (build) or decrease (draw) ranges: 3 to 4 MMb draw range for crude stocks, Bloomberg is expecting a 2.25 MMb draw, last year there was a 2.9 MMb draw  and the 5-year average is a 3.5 MMb draw. For gasoline, Citi Futures is expecting a 3 to a 4 MMb build range,  Bloomberg is expecting a 1.75 MMb build, last year there was a  1.3 MMb build, and the 5-year average is a 2.4 MMb build.  For distillates, Citi Futures is expecting a  1 to a 2 MMb build range, Bloomberg is expecting a .15 MMb build, last year there was a 2.1 MMb draw and the 5-year average is a .1 MMb draw. Citi Futures is expecting no change in refinery % operable utilization of 95.4%, last year was 91.5%, and the 5-year average is 87%.
Click here to view today's Refined Products MarketWatch.

Natural Gas

On Tuesday, December 16th, the prompt-month NYMEX Natural Gas Futures Contracts opened at $3.658, over six cents under Monday’s closing price of $3.719.  After spending the early morning seesawing along the $3.65 mark with an almost accidental upward trend, January managed to steal a quick jump to the intraday high of $3.690 near 10:30 AM.  As if spent even by this small exertion, prices fizzled out slowly for the next hour, and were dangling beneath the $3.65 mark for the first half of eleven o’clock trading.  By 11:30AM, however, January gathered itself into a stable upward push through to noon, but another bearish forecast redirected the contract’s momentum, and persuaded it onto a downward route for an uneventful two hours.  While having exhibited a minimum of volatility scattering during their afternoon descent, prices stomped down just after 2:00PM, pounding the intraday low of $3.605 at 2:20PM.  Buoyed up half conscious across the finish line, January closed down at $3.619 on Tuesday.  As we reach the halfway point of what is usually a peak winter month, December demand continues to be weak, and analysts predict that the storage deficit will be fully recouped in the next few weeks.

This morning in Globex, WTI Crude was down $1.45; Natural Gas was up five cents; Heating Oil was flat; and, Gasoline was down two cents.

Cash prices were slightly up in New England and down in New York.

Natural Gas Glossary

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