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MarketWatch

Refined Products
10.20.2014

Recap: Oil markets rebounded across the board Friday after paring losses on the week, as positive U.S. consumer confidence and housing starts helped reverse the oversupply/weak demand sentiment dominating the bulk of the week.  The Thomson Reuters/University of Michigan index of consumer confidence increased to a high not seen since July 2007 to 86.4 in preliminary October figures, up from 84.6 in September.  The U.S. Commerce Department reported Friday that housing starts increased 6.3%. NYMEX ULSD (HO) settled under the $2.50 mark, up  2.73 cents to $2.4976. November NYMEX RBOB settled up 2.18 cents to $2.2327 while December RBOB settled up 1.43 cents to $2.1646, expanding the Nov-Dec backwardation to 6.81 cents. November NYMEX (WTI) Crude settled up 5 cents to $82.75 while the incoming December WTI contract settled up 11 cents to $82.06. November WTI futures will be expiring tomorrow. ICE Brent settled up 34 cents to $86.16, putting the December Brent-WTI spread to $4.10.  

Currently, oil markets are mixed as NYMEX ULSD (HO) is down 48 points to $2.4928 while NYMEX RBOB is up 38 points to $2.2368. NYMEX Crude is up 36 cents to $83.11 while ICE Brent Crude is down 18 cents to $85.98.

DOE Inventory Report Recap:  From the EIA's weekly DOE Inventory Report released Thursday, October 16th, for the week ended October 10, 2014, refinery seasonal maintenance continues.  Total percent of refiner's operable capacity utilization rate declined 1.2 percentage points to 88.1% from 89.3% last week, but still reflected a stronger rate as compared to 86.2% last year. East Coast (PADD 1) refiners posted a 1.8 percentage point decline to 87.4% from 89.2% from last week, and 18.3% higher than 2013, which was 73.9%. This stronger-than-normal refining utilization may continue to explain why PADD 1 (East Coast) distillate stocks have increased for the 7th straight week: this week, up .581 MMbs to 43.07 MMbs. PADD 1C (Lower) distillate inventories were the big winner and increased .75 MMbs to 13.57 MMbs and are now 12% higher than last year and are 7% above the 5-year average. PADD 1B (Central Atlantic including New York) and PADD 1A (New England) both declined last week, but are closing previous inventory gaps.  PADD 1B declined .162 MMbs to 22.9 MMbs and is 2.2% higher than last year at this time but 19.6% below the 5-year average. PADD 1A  lost only .011 MMbs last week, bringing this region even to last year's levels, but 29.3% below the 5-year average (see EIA's PADD 1 Distillate Fuel Oil Stocks chart below). On the gasoline side, PADD 1 stocks decreased 2.6 MMbs to 52.3 MMbs, but were 8.3% lower than last year. 

Speculator "Spec" Watch:   Net speculative length decreased for NYMEX (WTI) but increased for NYMEX RBOB (Gasoline). NYMEX ULSD (HO) expanded for another net-short position and a 5th record high.  According to the CFTC's Commitments of Traders Report released on Friday for reporting through Tuesday, October 14th, the Money Manager (Speculative) category for NYMEX (WTI) Crude, net speculative length (combined futures and options contracts) decreased 8% from the previous week of 192,208 down to 176,671 futures and options contracts.  On the other hand, and surprisingly, NYMEX RBOB speculators were buying RBOB last week, and net speculative length increased 17.7%  from 20,363  futures and options contracts to 23,969 contracts.  NYMEX ULSD (HO) speculators increased their net-short position yet higher 13% to -34,470 more futures and options contracts from the previous week at -30,604 contracts! (Negative representing net-short position.) For ULSD(HO) speculators to be short at the beginning of the heating season has surely helped to move last week's price momentum lower.
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Natural Gas
10.20.2014

After Thursday’s down session, sparked by yet another bearish EIA Natural Gas Storage Report, the front month NYMEX Natural Gas Futures Contracts opened at $3.761 on Friday, October 17th, slightly above Thursday’s closing price.  November started to fall after the open, as traders remained wary about the swollen inventory and weak heating demand.  The downdraft persisted throughout the morning session, sending prices down to the intraday low of $3.715 around noon.  This was the lowest price since November of 2013.  Finding some short-term support from the latest weather forecasts, prices recovered to the upper $3.70s.  The remainder of the afternoon session was quiet, with November drifting along the $3.76 level to close at $3.766 on Friday.   

This morning in Globex, WTI Crude was up 32 cents; Natural Gas was down six cents; and, both Heating Oil and Gasoline were flat. . 

Both New England and New York cash prices were down.

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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