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Market Intel Archives

OPEC output cuts and increases in US production left oil futures around unchanged

April 21, 2017

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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Oil futures fell despite 1 million barrel fall in crude oil inventories

April 20, 2017

Recap: Brent fell to its lowest level in 11 days, while WTI hit an 8 day low after the EIA reported a 1.5 million barrel increase in gasoline inventories, as opposed to the expected 1.9 million barrel decrease. Oil futures fell despite the 1 million barrel fall in crude oil inventories, which was smaller than the expected 1.5 million barrel draw. May WTI fell as much as 4.4% in a late session sell-off, while June Brent slipped as much as 4.2% prior to settlement. May WTI settled at $50.44 a barrel, down $1.97, or 3.76% and June Brent settled at $52.93 a barrel, down $1.96, or 3.57%.

June WTI, the soon to be spot contract ,settled just above the 30-day moving average of $50.77, making this Thursday’s target. With moving oscillators set in overbought territory and pointing to the downside, we would look for a test at the aforementioned average and for a run at $50.35.

May RBOB fell 5.2 cents, or 3.04%, to $1.6590 a gallon, while May heating oil lost 4.06 cents, or 2.5%, to $1.5813 a gallon.

Fundamental News:  The EIA reported that US distillate fuel oil stocks fell to the lowest level in the week ending April 14th since November 2015.  Distillate stocks fell by about 2 million barrels to 148.3 million barrels.  Distillate stocks in the East Coast fell by 1.5 million barrels to 51.9 million barrels, the lowest level since July 2015. 

The Renewable Fuels Association said blending of ethanol in US gasoline increased over a key level of about 10% in 2016.  The average content of ethanol in finished gasoline totaled 10.04% in 2016.  Higher ethanol blends including E15, which has about 15% biofuel content, contributed to the increase.  

The EPA said it would reconsider a rule on emissions from oil and gas operations and delay its implementation.  It said it would delay the rule’s compliance date, which had been June 3rd, for 90 days, as the agency takes public comments. 

OPEC’s Secretary General, Mohammed Barkindo, said oil producing nations are moving closer towards ending a global oversupply and rebalancing the market.  He said OPEC will decide next month at its meeting on May 25th whether to extend its cuts in output beyond June.  He would not say whether the agreement will be extended for another six months, but added that any decision taken would be in the interest of all producing and consuming countries.  He added that OPEC and other producers are committed to reducing their stockpiles to the industry’s five year average and all countries participating in the six month deal to pare output are committed to restoring the market’s stability.  He also stated that OPEC is hoping to attract other non-OPEC producers in its effort to manage the oil market.   

Kuwait’s Oil Minister, Issam Almarzooq, said Iran will probably be allowed to keep its oil production unchanged if OPEC decides to extend its six month agreement on output cuts beyond June.   

The UAE’s Energy Minister, Suhail Al-Mazrouei, said a long time is needed for oil inventories to fall.  He said the UAE is satisfied with producers’ commitment to cutting output.  He also stated that the UAE is already fully compliant with its quota under the OPEC and non-OPEC agreement and could cut its production further in the month ahead.  The UAE cut its output in March by more than 200,000 bpd from the benchmark October level that the deal is based on.  He said over six months, the UAE will cut its output by at least 140,000 bpd and may reduce its production even further. 

Sources stated that OPEC plans to meet with non-OPEC producers on the same day as its scheduled May 25th conference. 


Early Market Call - as of 9:00 AM EDT

WTI - May $ 50.53 up 9 cents

RBOB - May $ 1.6681 up 91 points

HO - May $ 1.5860 up 47 points


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Oil futures fell after U.S. shale oil production posted largest increase in two years

April 19, 2017

Recap: Oil futures fell on Tuesday on anticipation that U.S. shale oil production for the month of May would post its largest increase in more than two years. This overshadowed the agreed upon production cuts by OPEC and some non-OPEC members, pushing prices to their lowest level in 7 days. A slight rebound ensued, with May WTI settling at $52.41, down 24 cents or 0.46%. June Brent fell 47 cents, or 0.85%, to settle at $54.89.  

Sustained moves below $53.21 in May WTI, continues to entice sellers into this market, which pushed this spot contract below the 10-day moving average for the first time since March 29th , with a settlement right on the average. Technically, there is more room to the downside, with a possible test at the $51.50 level. Resistance remains at $53.21.

May RBOB fell 0.5% to $1.711 a gallon, while May heating oil slipped 0.7% to $1.622 a gallon.

Fundamental News:  According to Bloomberg, crude stocks at Cushing, Oklahoma are expected to fall by 570,000 barrels to 68.8 million barrels in the week ending April 14th. 

Genscape forecast a draw in gasoline stocks of about 400,000 barrels in the New York Harbor region in the week ending April 14th. 

According to the Joint Organizations Data Initiative, Saudi Arabia’s crude oil exports in February fell to 6.957 million bpd from 7.713 million bpd in January.  The country’s crude production increased by 263,000 bpd to 10.011 million bpd in February.  Meanwhile, Saudi Arabia’s domestic crude throughput increased by 546,000 bpd to 2.673 million bpd in February. 

Separately, the Joint Organizations Data Initiative also reported that Kuwait’s crude exports fell by 0.7% in February to 1.916 million bpd from 1.93 million bpd in January. 

The UAE’s Energy Minister, Suhail bin Mohammed al-Mazroui, said he saw healthy oil demand growth this year and believed inventories would fall, but that it would take more time to rebalance the market.  He said conformity within OPEC and other producers was improving and that the UAE was complying 100% with its pledge to cut production.

According to Bloomberg, preliminary US waterborne crude imports fell by 419,000 bpd to 4 million bpd in the week ending April 14th.  Imports in the Gulf Coast fell by 166,000 bpd to 2.3 million bpd while imports in the East and West Coast fell by 111,400 bpd and 141,000 bpd, respectively.  Total crude and product imports fell by 114,800 bpd to 5.9 million bpd. 

A provisional loading schedule showed that Iraq will export an average 3.22 million bpd of Basrah crude in May, up from 3.171 million bpd in its April program.  About 2.382 million bpd of Basrah Light crude are scheduled to be exported in May, while exports of Basrah Heavy crude are estimated at 838,708 bpd. 

A BP well on Alaska’s North Slope is no longer leaking crude oil or natural gas.  Environmentalists called on the state to investigate.  The crude spray was discovered on April 14th and capped early April 16th.  A second leak was emitting gas at a reduced rate and was closed off overnight on April 16th.

Russia cut its oil production during the first 16 days of April to 1.501 million metric tons a day, down from 1.508 million metric tons as of the end of March. 

Colonial Pipeline is allocating Cycle 24 shipments on Line 2, its main distillate line from Houston, Texas to Greensboro, North Carolina.


Early Market Call - as of 9:00 AM EDT

WTI - May $52.48, up 7 cents

RBOB - May $1.7050, down 57 points

HO - May $1.6242, up 18 points


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Oil futures fell on Monday after rise in U.S. rig count

April 18, 2017

Recap: After rising overnight on signs of economic growth in China, oil futures fell on Monday after another rise in the U.S. rig count. Market activity was quiet due to the long Easter weekend.  May WTI settled at $52.65 a barrel, down 53 cents, or 1%, while Brent for June delivery slipped 53 cents, or 0.95%.

May RBOB rose 0.1% to $1.737 a gallon, while May heating oil lost 0.2% to $1.646 a gallon.

Fundamental News:  Genscape reported that crude stocks held in Cushing, Oklahoma in the week ending Friday, April 14th fell by 481,391 barrels on the week and by 32,394 barrels from Tuesday, April 11th to 70,979,514 barrels. 

Saudi Arabia’s Energy Minister, Khalid al-Falih, said the level of compliance among OPEC and non-OPEC producers with a global deal to cut output is very good, above 100%, but added that it is premature to talk about extending the deal.  He said he saw a consensus within OPEC on stabilizing the oil market, and that producers would do whatever was necessary to achieve that goal, whether it took six months or more.  He said producers will look at the expected condition of the market over the next two years, and will be cautious when making their decision on any extension. 

Saudi Arabian Oil Co. chief executive, Amin Nasser, said the global oil market is moving closer to balance even as increases in US oil production push prices down in the short-term.  He said this is not a good indication of where the market is likely to be headed, as the large new production capacity and investment we will need in the future are lagging. 

Iran’s Oil Minister, Bijan Namdar Zanganeh, said compliance by OPEC and non-OPEC producers with an agreement to reduce oil production is improving month after month and the oil market is showing that by its favorable reaction.  He also stated that “OPEC’s decision to cut production has been a good one and we fully comply with its decision.” 

Libya’s National Oil Corp indefinitely delayed its Sharara oilfield output target.  The goal to increase output from the oilfield to 280,000 bpd, which was supposed to happen next week, will be delayed indefinitely. 

A well operated by BP Exploration Alaska Inc on Alaska’s North Slope is no longer leaking oil after leaks were discovered Friday morning.  The well was venting gas, which caused a spray of crude oil to impact the well pad.

Officials at Iraq’s South Oil Co said repair work at a Basra oil jetty damaged by a tanker collision last month were completed on Sunday.  A one-million barrel vessel was anchored at the berth early on Monday, loading a cargo of light crude. 

According to the EIA, US shale production in May is expected to increase 123,000 bpd to 5.19 million bpd.  In the Permian, oil production is forecast to increase by 76,000 bpd to 2.36 million bpd while in the Eagle Ford region, output is set to increase by 39,000 bpd to 1.22 million bpd.  Production in the Bakken region is forecast to fall by 1,400 bpd to 1.02 million bpd. 

IIR reported that US oil refiners are expected to shut in 586,000 bpd of capacity in the week ending April 21st, increasing available refining capacity by 146,000 bpd in the previous week.  IIR expects offline capacity to increase to 646,000 bpd in the week ending April 28th. 

Early Market Call - as of 9:00 AM EDT

WTI - May $52.43, down 22 cents

RBOB - May $1.7046, down 1.54 cents

HO - May $1.6239, down 89 points


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Oil prices moved higher after IEA report a near balance of global supply and demand

April 17, 2017

Recap: Oil prices moved higher in early trading on Thursday, after the IEA reported a near balancing of global supply and demand for the oil market. However, gains were reversed after fresh data showed a steady climb in U.S. production and after the IEA cut its oil demand growth forecast for 2017 by 40,000 barrels per day. The agency also noted that its revised level of 1.3 million barrels per day may be too optimistic.

May WTI rose 7 cents, or 0.1%, to settle at $53.18 a barrel, up 1.8% on the week. Brent for June delivery added 3 cents or less than 0.1%, to $55.89 a barrel, up about 1.2% for the week.

May RBOB fell 0.4% to $1.735 a gallon, while May heating oil declined 0.2% to $1.650 a gallon.

Fundamental News:  The IEA stated that global demand for oil is finally close to outstripping supply after nearly three years of surplus production, despite growth in the overhang of unused crude.  The agency said oil stocks across the Organization for Economic Cooperation and Development fell by 17.2 million barrels in March.  Over the first three months of the year, stocks were up 38.5 million barrels or 425,000 bpd following a large increase in January.  Overall, OECD stocks fell by 8.1 million barrels in February to 3.055 billion barrels as demand outpaced supply by about 200,000 bpd between January and March.  However, stocks are still 330 million barrels above the five year average.  The IEA cut its forecast for global oil demand growth in 2017 by 40,000 bpd to 1.32 million bpd.  In regards to supply, the IEA said global production fell by 755,000 bpd in March to 95.98 million bpd as OPEC and its partners complied with their joint deal to cut output by 1.8 million bpd in the first half of the year.  For 2017, the IEA expects non-OPEC supply to increase by 485,000 bpd, above its previous estimate of 400,000 bpd, led by increases in US production growth.

Baker Hughes reported that the number of rigs searching for oil in the US increased by 11 to 683 in the week ending April 13th. 

Nigeria’s military said it destroyed 13 illegal refineries in the Niger Delta oil hub.  Military authorities say there are hundreds of illegal refineries in the region, which process stolen crude from oil company pipelines. 

Iraq’s SOMO is expected to ship a total of 99.845 million barrels of Basrah Light and Heavy crude for May.  Basrah Light shipments are expected to total 73.845 million barrels in May compared with 70.13 million barrels in April.  Basrah Heavy crude shipments are expected to total 26 million barrels in May compared with 25 million barrels in April. 

China’s General Customs Administration reported that the country’s crude imports increased to an all-time high in March to 38.95 million tons or 9.17 million bpd.  This is compared with 8.286 million bpd in February and far exceeded an earlier record of 8.57 million bpd in December.  The customs data also showed that refined fuel imports in March increased by 10.2% on the year to 2.7 million tons while exports increased nearly 25% to 4.67 million tons. 

Gasoline stocks held in independent storage in the Amsterdam-Rotterdam-Antwerp hub in the week ending April 13th increased by 1.28% on the week but fell by 6.57% on the year to 1.109 million tons.  Gasoil stocks fell by 5.95% on the week and by 15.02% on the year to 3.067 million tons while fuel oil stocks fell by 3.64% on the week but increased by 4.32% on the year to 1.112 million tons.  Naphtha stocks fell by 27.54% on the week but increased by 93.86% on the year to 221,000 tons while jet fuel stocks fell by 0.58% on the week and by 12.13% on the year to 681,000 tons. 

Early Market Call - as of 9:00 AM EDT

WTI - May $53.15, down 3 cents

RBOB - May $1.7372, up 23 points

HO - May $1.6461, down 31 points


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Oil market trended higher on support from Saudi Arabia to extend OPEC output cut

April 13, 2017

Recap: The oil market continued to trend higher on Wednesday morning in follow though strength seen on Tuesday.  The market remained supported by the reports that Saudi Arabia favored extending the OPEC output cut agreement beyond its initial six-month term.  The market rallied to a high of $53.76 in early morning trading before it retraced some of its gains ahead of the release of the EIA’s weekly petroleum stock report.  The market was initially supported by the report, which showed an unexpected draw in crude stocks of 2.166 million barrels on the week and larger than expected draws in heating oil and gasoline stocks.  However, the crude market gave up any of its gains and sold off in light of the report showing that US crude production continued to increase.  The report showed that US producers increased their output by 36,000 bpd last week, the eighth consecutive increase in production.  The market traded down to a low of $52.98, where it found some support ahead of the close.  The May WTI contract settled down 29 cents at $53.11.  It later continued to sell off and posted a new low of $52.80.  The June Brent contract settled down 37 cents at $55.86.  Meanwhile, the heating oil market settled up 14 points at $1.6520 while the RBOB market settled down 1.6 cents at $1.7417.

Fundamental News:  OPEC stated that it cut its output in March by more than it pledged under the output cut agreement and added that oil inventories had fallen in February, suggesting that its effort to cut the oversupply is succeeding.  OPEC’s total oil production in March fell by 153,000 bpd on the month to 31.928 million bpd.  OPEC’s 11 members with supply targets cut output to 29.761 million bpd in March, below its 29.804 million bpd target.  However, OPEC raised its forecast for supplies from non-OPEC producers in 2017 as higher oil prices encourage US shale drillers to produce more. 

Iraq and the UAE produced more crude in March than they agreed to produce under the OPEC output cut agreement.  Iraq’s output totaled 4.4 million bpd while the UAE’s output totaled 2.895 million bpd.  Iraq had committed to cut supplies to 4.35 million bpd while the UAE’s target is 2.87 million bpd.  Algeria, Ecuador and Gabon also produced more than allowed by the accord. 

Russia’s Energy Minister, Alexander Novak, said Russia will cut its crude oil production by 300,000 bpd by the end of April.  He plans to meet Russian oil companies in late April to discuss the situation on the global oil market. 

Azerbaijan’s Energy Ministry stated that the country will not attend the monitoring committee meeting between OPEC and non-OPEC oil producing countries in April as the country has not been invited.   
Saudi Aramco is said to have given full contractual supply to Asian customers for May.  In April, Saudi Aramco cut heavier crude over light supplies for some Asian buyers. 

A former Saudi Energy Ministry official, Ibrahim al-Muhanna, said oil prices at around $60/barrel in the next three years and increasing to $70 to $80/barrel in the next decade would rebalance the market.   

Libya’s National Oil Corp has lifted the force majeure on the Wafa oilfield after its closed oil and gas pipelines were reopened.  The oilfield resumed operations after the reopening of a pipeline to the Mellitah processing complex. 

IIR reported that US oil refiners are expected to shut in 732,000 bpd of capacity in the week ending April 14th, increasing the available refining capacity by 284,000 bpd from the previous week.  IIR expects offline capacity to fall to 586,000 bpd in the week ending April 21st. 

Early Market Call - as of 9:00 AM EDT

WTI - May $53.26, up 15 cents 

RBOB - May $1.7389, down 29 points 

HO - May $1.6548, up 30 points 
 

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Release of EIA & API inventory report limited gains for oil futures

April 12, 2017

Recap: Production outages in Libya and Canada gave early rise to oil futures; however, gains were limited, as traders awaited the release of the API and EIA inventory report. May WTI traded 2 cents above its 200-day moving average of $53.21, only to be met by resistance. The lack of follow through spurred profit taking on the long side, pushing prices to the lows of the day. By late afternoon, prices reverted back to the upside on reports that Saudi Arabia expressed wishes to extend the OPEC output cuts for another 6 months, and as geopolitical tensions heat up. New highs were achieved, with May WTI extending beyond the aforementioned 200-day moving average. May WTI settled toward the high of the day, finishing at $53.43 a barrel, up 32 cents, or 0.60%. June Brent gained 25 cents, or 0.45%, to settle at $56.23 a barrel.

May RBOB fell 1.8 cents, or 1.2%, to $1.513 a gallon, while May heating oil lost 1.9 cents, or 1.4%, to $1.29 a gallon.

Fundamental News:  Bloomberg reported that crude stocks at Cushing, Oklahoma increased by 800,000 barrels in the week ending April 7th to 69.9 million barrels. 

According to the EIA’s Short-Term Energy Outlook, total world petroleum demand in 2017 is forecast to increase by 1.49 million bpd to 98.16 million bpd.  Demand in 2018 is expected to increase by 1.63 million bpd to 99.79 million bpd.  Meanwhile, total US oil demand in 2017 is expected to increase 250,000 bpd to 19.88 million bpd and by 340,000 bpd to 20.22 million bpd in 2018.  The EIA estimated that US gasoline demand is expected to fall by 30,000 bpd to 9.3 million bpd in 2017 but increase by 40,000 bpd to 9.34 million bpd in 2018 while distillate demand is forecast to increase by 70,000 bpd to 3.95 million bpd in 2017 and by 120,000 bpd to 4.07 million bpd in 2018.  US oil production is expected to increase by 350,000 bpd to 9.22 million bpd in 2017 and by 680,000 bpd to 9.9 million bpd in 2018. 

Saudi Arabia cut its production to 9.9 million bpd in March from 10 million bpd in February. 

Reuters reported that production from the 11 OPEC members with output targets under the deal averaged 29.757 million bpd in March. 

Libya’s oil production fell to 490,000 bpd after the Sharara field halted its output.  Production fell from 703,000 bpd after the country’s largest oil field stopped pumping for an undisclosed reason. 

Kuwait’s Oil Minister, Issam Almarzooq, said there are signs that global oil stocks are gradually declining. 

Russia’s Energy Minister, Alexander Novak, said the country’s oil output cuts will reach 250,000 bpd by mid-April.

Total estimated export volume on Aframaxes, Suezmaxes and VLCCs from Iranian ports in March fell to 2.35 million bpd from 2.409 million bpd in February. 

According to cFlow, S&P Global Platts trade flow software, just under 1,000,000 metric tons of distillates have departed from the US Gulf Coast for arrival in Europe in April. 

According to Bloomberg, preliminary US waterborne crude imports fell by 1.2 million bpd to 3.7 million bpd in the week ending April 7th. 

IHS reported that crude and refined product shipments from the US Gulf increased to 3.45 million metric tons on 85 ships in the week ending April 6th.  It is up 11% from the previous week’s 3.1 million metric tons on 75 ships. 

Early Market Call - as of 9:00 AM EDT

WTI - May $53.63, up 22 cents

RBOB - May $1.7636, up 59 points

HO - May $1.6633, up 1.28 cents


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Oil futures rose for fifth straight session

April 11, 2017

Recap: Both WTI and Brent traded within an extremely tight range throughout most of the session, only to rise to a new session high prior to the settlement period. May WTI rose back above the $53 mark, to settle at $53.08, up 84 cents, or 1.61%. Brent for June delivery rose 74 cents, or 1.34%, to settle at $55.98.

Oil futures rose for the fifth straight session, with the May futures closing in on its 200-day moving average, which is currently set at $53.21. Just beyond this average, is the upper trend line on the ascending channel that has been forming on a daily bar chart. For tomorrow’s session, this line is set at $53.80, making this the near term target. Support rests at $52.80, and below that at $52.30.

May RBOB finished up 1.2 cents, or 0.7%, to $1.758 a gallon, while May heating oil added 1.9 cents, or 1.2%, to $1.647 a gallon.

Fundamental News Genscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending Friday, April 7th increased by 129,875 barrels on the week and by 247,855 barrels from Tuesday, April 4th to 71,460,905 barrels. 

Libya’s state owned National Oil Corp declared force majeure on loadings of Sharara crude oil from the Zawiya oil terminal on Monday. The Sharara oil field was shut down on Sunday afternoon after an unknown group blocked a pipeline linking it to the Zawiya oil terminal. The oil field had been only back in operation for slightly more than a week after being shut down in late March. Sharara’s crude oil production had been running at 213,000 b/d before being shut down. The NOC had been hoping to boost output from the field to 270,000 b/d by the end of April.

Kuwait’s oil minister said Monday that he sees “positive indications in the decline of global oil inventories and expects improvement in oil market in coming months.” He also said he expects March compliance with the OPEC and non-OPEC production agreement will be shown to be “higher than previous couple of months”.

Enterprise Product Partners announced it will build a new 571 mile pipeline to transport volumes of NGLs from the Permian basin to the company’s NGL fractionation and storage complex in Mont Belvieu, Texas. The pipeline will have a 250,000 b/d capacity with the potential to be expanded to 600,000 b/d. The project is expected to be in service by 2Q2019.

Colonial Pipeline notified customers it was allocating space for Cycle 22 distillate shipments on Line 20.

Kazakhstan’s Energy Minister, Kanat Bozumbayev, said the country will deliver on its promise to OPEC to cut its output by an average of 20,000 bpd in the first half of the year from the 1.7 million bpd it produced in November. 

Iraq’s Kirkuk oil fields have halted pumping for three days, according to North Oil Company.  The halt in shipments from Kirkuk in north Iraq will not impact exports via Turkey’s Ceyhan port because the terminal’s storage contains enough oil for export for several days. 

IIR estimated Monday that U.S. oil refiners are expected to have 763,000 b/d of capacity off line in the week ending April 14th, increasing the available refinery capacity by 177,000 b/d from the previous week.

Early Market Call - as of 9:00 AM EDT

WTI - May $53.07, down 1 cent

RBOB - May $1.7533, down 48 points

HO - May $1.6464, down 11 points


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Oil prices jumped in reaction of U.S. fired missiles at Syrian government airbase

April 10, 2017

Recap: Oil futures jumped more than 2% in reaction to the U.S. fired missiles at a Syrian government airbase in overnight trading. Trading was chaotic as May WTI peaked the session at $52.94, but by sunrise on the east coast, the market retraced itself and fell into negative territory, pressured by strength in the dollar. Just as it struggled to maintain earlier gains, oil futures struggled to the downside as well, rising back above unchanged. May WTI settled above $52.24 a barrel, up 54 cents, or 1.04%, while Brent for June delivery gained 35 cents, or 0.64%, to settle at $55.24.

The Dec17/Dec18 WTI spread we had last written about on March 27th, traded at its widest backwardation (front month premium) since February 27th, having peaked on Friday at 82 cents. This puts this spread in range of testing the post OPEC output agreement high of $1.09. A break above $1.09 allows for a run at $1.25, the highest this spread has traded since 2014.

May RBOBrose 1.66 cents, or 1%, to close at $1.7462 a gallon, its highest since August 2015. For the week, gasoline rose 2.5%. May heating oilrose 1.55 cents, or 1%, to $1.6284 a gallon, its highest close since Feb. 27. For the week, heating oil gained 3.4%.

Fundamental News: The Trump administration is developing at least one order aimed at both a new five-year offshore oil and natural gas leasing plan and reversing an Obama administration decision to bar drilling in the majority of the US Arctic waters and a large portion of its Atlantic waters.

Baker Hughes reported that the number of rigs searching for oil in the week ending April 7th increased by 10 to 672.

According to Oil Movements, OPEC’s shipments are expected to fall by 120,000 bpd to 23.9 million bpd in the four weeks ending April 22nd compared with the previous period ending March 25th.

Russia’s Prime Minister, Dmitry Medvedev, said on Friday that US cruise missile strikes on a Syrian airbase were "one step away from clashing with the Russian military."

Russia’s Energy Minister, Alexander Novak, said it was premature to say if the OPEC/non-OPEC agreement to cut production should be extended into the second half of the year. Meanwhile, Russia’s Deputy Energy Minister, Kirill Molodtsov, said the country’s daily oil production was under 1.5 million tons or 10.995 million bpd at the beginning of April.

Russia’s Deputy Prime Minister, Arkady Dvorkovich, said the country’s deal with OPEC to cut production has not delivered as much as the country expected. Russia pledged to cut output to 10.947 million bpd by the end of April, down 300,000 barrels from the record level it had in October.

Crude production data for March indicates that Russia and Kazakhstan are yet to meet their output cut obligations under the OPEC/non-OPEC agreement while Azerbaijan exceeded its promised cut last month. Assuming there is no major shift in production from February, calculations by S&P Global Platts show that the three former Soviet states met their combined obligations by about 73% for March.

Three tankers holding about 1.35 million barrels of gasoline and alkylate are drifting with no instructions for delivery around the Caribbean Isles.

IIR reported that US oil refiners are expected to shut in 940,000 bpd of capacity in the week ending April 7th, increasing available refining capacity by 79,000 bpd from the previous week. IIR expects offline capacity to fall to 763,000 bpd in the week ending April 14th and to 614,000 bpd in the following week.

EarlyMarket Call - as of 9:00 AM EDT

WTI - May $52.81, up 57 cents

RBOB - May $1.7540, up 87 points

HO - May $1.6414, up 1.28 cents


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Oil market posted inside trading day as traders remained cautious on high US crude inventories

April 07, 2017
Recap:The oil market posted an inside trading day on Thursday as traders remained cautious about record high US crude inventories.  The market posted a low of $50.77 on the opening and traded in a 20 cent trading range before the market began its move higher.  The market gradually traded higher throughout the session and posted a high of $51.82 ahead of the close.  May WTI, which failed to test its resistance at its previous high, settled higher for the third consecutive session. It ended the day up 55 cents at $51.70, the highest settlement since March 7th.  The June Brent contract settled up 53 cents at $54.89.  Meanwhile, the product markets also settled in positive territory.  The May RBOB contract settled up 1.43 cents at $1.7296 and the May heating oil contract settled up 94 points at $1.6129.   
 
Fundamental News:  Genscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending April 4th increased by 312,745 barrels on the week but fell by 117,980 barrels from Friday, March 31st to 71,213,050 barrels.
 
Shipping and oil sources said Iran has sold all the oil it had stored for years at sea and the country is now struggling to keep increasing exports as it deals with production constraints. They said Iran had sold its stocks from floating storage in the past two weeks.  Much of the oil stored was condensate.  Prior to the lifting of sanctions, Iran stored unsold oil on ships, which peaked in 2015 at 40 million barrels on around 25 tankers.  The country has up to 60 oil tankers in its fleet.  Iran's drawdown of floating storage gathered pace in September.  By the start of 2017, Iran still held an estimated 16 million barrels of oil on ships.
 
The head of Libya's National Oil Corp, Mustafa Sanalla, defended the organization on Thursday against repeated challenges to its legitimacy, saying it was working for all Libyans rather than any particular faction.  On Thursday, a spokesman for the breakaway NOC in Benghazi said it held an emergency meeting a day earlier to discuss the Tripoli NOC and the transgression it carries out in monopolizing the sale of oil.  He said contracts with international oil companies were protected by the UN.  He said Libya's national output stands at 693,000 bpd and further increases at Sharara could help it increase it to 800,000 bpd by the end of April and to 1.1 million bpd by August. 
 
The EIA reported that US weekly imports of crude from Saudi Arabia, Iraq and Venezuela each fell by more than 20% in the week ending March 31st.  Imports of Saudi crude fell to 888,000 bpd, the first time this year that imports from Saudi Arabia fell below 1 million bpd. 
 
China will import record amounts of oil from West Africa this month as OPEC's supply cuts allow other countries to gain a greater share in the Asian market.  West African producers led by Angola and Nigeria are set to send crude to China at the rate of 1.48 million bpd in April.  Overall Asian imports of West African crude are expected to reach 2.4 million bpd this month. 
China's apparent oil demand increased by 5.3% on the year in the first two months of 2017 to 11.65 million bpd. 
 
Colonial Pipeline is allocating Cycle 22 shipments on Line 2, its main distillate line from Houston, Texas to Greensboro, North Carolina.
 
Gasoline stocks held in independent storage in the Amsterdam-Rotterdam-Antwerp terminal in the week ending April 6th increased by 11.62% on the week but fell by 14.18% on the year to 1.095 million tons.  Gasoil stocks fell by 0.76% on the week and by 6.19% on the year to 3.261 million tons. 
 
Early Market Call - as of 9:00 AM EDT
WTI - May $51.85, up 15 cents
RBOB - May $1.7264, down 33 points
HO - May $1.6171, up 42 points 
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