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Refined Products

Recap: Oil futures bounced around the unchanged level, trading within a 30 cent range for most of the session, as traders continue to sort through OPEC output cuts and increases in U.S. production. Waning confidence in OPEC’s agreement to cut back on output, combined with growing U.S. production has taken the wind out of the recent ascent in prices, as is evident in calendar spreads. Weakness in these spreads extends from the June17-July17 spread all the way through to December17-January18. After peaking at -0.06 in December, the discount in the June17-July17 WTI spread has weakened by more than 30 cents. This, along with falling open interest, indicates doubts that this market will be able to sustain strength. 

June WTI, made new lows in post settlement trading, falling below the 30-day moving average of $50.77. This allows for a run at support set at $50.35. Below this level, support can be found at $49.70. Above the market, resistance can be found at $50.85 and $51.30.  June WTI settled at $50.71, down 14 cents, or 0.3%. June Brent finished up 6 cents, or 0.11%, settling at $52.99.

May RBOB gained 0.7% to $1.671 a gallon and May heating oil finished down by 0.2% to $1.579 a gallon.

Fundamental News:  Genscape reported that crude stocks held in Cushing, Oklahoma in the week ending Tuesday, April 18th fell by 740,418 barrels on the week and by 708,024 barrels from Friday, April 14th to 70,271,490 barrels. 

Saudi Arabia’s Oil Minister, Khalid al-Falih, said crude producing countries reached an initial agreement to extend output cuts.  He said OPEC and other major producers have failed, after three months of cutting production, to achieve their target of reducing oil inventories below the five-year historical average, although there is a high level of commitment.  He said countries participating in the cuts have yet to reach a consensus on continuing their agreement into the second half of the year, and an extension would not necessarily be for an additional six months.  Separately, Oman’s Oil Minister, Mohammed Al-Rumhy, said Gulf Cooperation Council countries agreed to push for an extension of cuts during a meeting on Wednesday.  He said a high number of producers favored extending a supply restraint agreement.  Iran and Venezuela have expressed support for an extension of the cuts.  Meanwhile, Kuwait’s Oil Minister, Issam Almarzooq, stated that if OPEC and non-OPEC oil producers decide to extend their six month agreement on output cuts, the cuts may become less deep as oil demand is expected to be stronger for seasonal reasons in the second half of 2017.  In regards to Iran, he stated that Iran’s Oil Minister made a commitment to freeze output at 3.8 million bpd for the rest of the year on the assumption that the cuts are extended beyond June. 

Russia’s Energy Ministry said it is still too early to comment if the oil output deal between OPEC and non-OPEC producers will be extended through the second half. 

The leader of Iraq’s Shi’ite ruling coalition, Ammar al-Hakim, said Iraq supports an extension of a deal between oil exporters to reduce global supply in order to support crude prices. 

According to the EIA, crude imports from Saudi Arabia increased by 34% to 1.19 million bpd in the week ending April 14th. 

Venezuela is scheduled to unload 13 tankers carrying oil products this month, the highest this year, as PDVSA’s refineries continue to struggle. 

Libya’s El Feel or Elephant oil field is expected to resume operations. 

Early Market Call - as of 9:00 AM EDT

WTI - May $50.62, down 2 cents

RBOB - May $1.6717, up 12 points

HO - May $1.5776, down 13 points

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Natural Gas

Thursday, April 20th, saw the front-month NYMEX Natural Gas Futures Contracts open at $3.188, just above Wednesday’s closing price of $3.185.  Uncertain trading through opening hour saw prices fluctuate along the $3.18 mark, recording the intraday high of $3.196 at 9:40AM.  Trending lower to $3.165 as the 10:30AM storage report drew near, a bearish storage injection gave the market pause before sinking to $3.138 ten minutes later.  Moving sideways along $3.155 to finish the morning, a slow descent to the intraday low of $3.134 by 1:10PM was recovered in the subsequent hour, as May closed lower on Thursday at $3.159.

The EIA Natural Gas Storage Report published on Thursday showed a 54 BCF injection to storage for the week ended April 14th – larger than the market estimate of 45 BCF. Total working gas in storage was reported as 2,115 BCF; 14.8% below this time last year and 15.4% above the five-year average.

This morning in Globex, WTI Crude was down slightly; Natural Gas was unchanged; Heating Oil was unchanged; and, Gasoline was up one cent.  Additionally, cash prices were lower in New York and New England .

Natural Gas Glossary

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