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MarketWatch

Refined Products
9.25.2017

Recap: The November crude futures on Friday, posted an inside trading day after the Joint Ministerial Monitoring Committee, comprised of Algeria, Kuwait, Venezuela, Russia and Oman, did not make a recommendation on whether OPEC and non-OPEC producers should extend their output cut agreement beyond March 2018.  The market traded to a high of $50.78 in overnight trading.  However, as it failed to breach Thursday’s high of $50.81, the market erased its gains and sold off to a low of $50.29.  The oil market later bounced off its low and traded in a 40 cent trading range ahead of the close as it attempted to test its highs.  The November WTI contract settled up 11 cents at $50.66, while the November Brent contract settled up 43 cents at $56.86.  The product markets settled in positive territory, with the heating oil market settling up 10 points at $1.8163 and the RBOB market settling up 2.46 cents at $1.6684.

Fundamental News: Kuwait’s Oil Minister, Essam al-Marzouq, said that the oil market was well on its way towards rebalancing.  He said the backwardation in the oil market was a sign of declining inventories.  He also stated that Libya and Nigeria will contribute to the supply cut deal once their production stabilizes.  He stated that OPEC and the other producers will likely wait until the next meeting to decide on whether to extend the oil output cut deal. 

Venezuela’s Oil Minister, Eulogio Del Pino, said OPEC and other oil producers are evaluating all options in their efforts to reduce an oversupply, including extending their agreement to cut supplies that is due to expire in March.  He said the oil market was recovering very strongly. 

Russia’s Energy Minister, Alexander Novak, said OPEC and other oil producers will not make a decision until January on whether to extend their agreement to cut production.  He called on the countries who are not in full compliance with the oil supply cut deal to reach their targets.  He also stated that OPEC and other oil producers need to continue coordinated action and work on a strategy from April 2018.  He said OECD oil inventories had fallen to 3 billion barrels in August, while crude oil in floating storage had been falling since June. 

Nigeria’s Oil Minister, Emmanuel Ibe Kachikwu, said the country’s production is currently averaging 1.69 million bpd, below its 1.8 million bpd limit it agreed to under the OPEC and non-OPEC output cut agreement.  He said the oil producers will deal with an oil supply cut extension in March, if there is a need for an extension.  He also added that he would be happy to end the year with an oil price of $60/barrel.

A Libyan oil source stated that the country’s national oil production stood at about 900,000 bpd, down from about 1 million bpd in recent months. 

Baker Hughes reported that the number of rigs drilling for oil in the US fell by five to 744 in the week ending September 22nd. 

IIR reported that US oil refiners are expected to shut in 1.792 million bpd of capacity in the week ending September 22nd, increasing available refining capacity by 1.018 million bpd from the previous week.  IIR expects offline capacity to fall to 1.011 million bpd in the week ending September 29th and to 1.007 million bpd in the following week. 

 

Early Market Call - as of 9:00 AM EDT

WTI - Nov  $51.22, up 56 cents

RBOB - Oct $1.6827, up 1.46 cents

HO -Oct $1.8294, up 1.28 cents


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Natural Gas
9.25.2017
Friday, September 22nd, saw the front-month NYMEX Natural Gas Futures Contracts open at $2.959, a penny below Thursday’s closing price of $2.946.  Despite a momentary decline to the intraday low of $2.950 as markets opened, the contract rose modestly through the morning to reach $2.970 by midday.  Marking the intraday high of $2.978 at 12:30PM, forecasts for the return of seasonal temperatures by early next week soon directed prices lower, as October closed nearly flat on Friday at $2.959.

This morning in Globex, WTI Crude was up 65 cents; Natural Gas was up two cents; Heating Oil was up two cents; and, Gasoline was up two cents.

New York basis values were lower for all seasons, whereas New England basis values were higher for the coming winter season and lower for the following summer months.  Additionally, cash prices were higher in both regions.
 
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