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Market Intel Archives

Oil futures hit highest level since July 2015

February 22, 2017

Recap:  Oil futures climbed to their highest level since July 2015, on strong belief that OPEC members are sticking to their agreement to cut output. Current adherence to the cuts sits at just over 90%. April WTI peaked above $55 a barrel, while April Brent broke above $57 a barrel. Gains were severed as the session progressed, with April WTI settling at $54.33, up 55 cents, or 1%, while April Brent finished at $56.66, up 48 cents, or 0.85%.

RBOB futures dragged the rest of the complex lower, as the March contract fell 2.26 cents, or -1.5%, to settle at $1.4940 a gallon. March heating oil finished up 0.6 cents, or 0.4%, to settle at $1.6425 a gallon.

Fundamental News: OPEC's Secretary General, Mohammed Barkindo, said that while confidence has returned to the oil market due to agreed output cuts, it is too early to say whether the output cut agreement should be extended.  He said any decision to extend the agreement past June will depend on global stock levels and an assessment of market fundamentals.  He said January data showed conformity from participating OPEC countries with output cuts above 90% and added that oil inventories would decline further this year.  He also said that he expected non-OPEC countries to raise their compliance.  He said he was cautiously optimistic on the outlook of the oil market.

Iran's Oil Minister, Bijan Zanganeh, said OPEC and non-OPEC oil producers are committed to their crude production cut.  

According to Petrologistics, OPEC increased its oil exports in the first two weeks of February, a sign the group could be slipping back after record compliance in its first month of output cuts.  It reported that the first 15 days of February have seen exports increase above the trailing average following a large decline in January.  Exports from OPEC countries in the first two weeks of February were higher than the average level from October 2015 to September 2016. 

The Joint Organizations Data Initiative reported that Saudi Arabia increased its oil exports and production last year to the highest monthly averages on record.  Exports increased to 7.65 million bpd on average last year from 7.39 million bpd a year earlier.

Iraq's Prime Minister, Haider Al-Abdi said the country needs oil prices to reach $60/barrel to plug the public deficit gap. 

Iran is set to sign a contract with Russia in the next 15 days to sell 100,000 barrels of oil. 

Vitol's executive committee member, Russell Hardy, said transport will be the main driver of demand growth for refined oil products, especially in Asia.  Vitol expects about 400 million cars to be added to the global fleet over the next 10 years, with China and India being the main growth countries.  Vitol expects global demand for diesel and gasoline to peak in 2027-2028 as the efficiency of engines continues to improve and assuming about 100 million electric vehicles are on the road.  However, demand growth for oil products in aviation and petrochemicals will continue long after. 

Rosneft signed investment and crude purchasing agreements with Libya's National Oil Corp as more international companies return to Libya to gain access to Africa's largest reserves. 

US gasoline margins fell to their lowest level since October 2015 on fears that record inventories may persist amid signs of weakening demand.  The gasoline crack spread fell by more than 7% to a low of $9.30/gallon in early trading on Tuesday. 

Kinder Morgan Canada will limit crude nominations on its Trans Mountain Pipeline System by 25% in March, meaning the line will carry 75% of nominated volumes.  March volumes on the Trans Mountain mainline system are expected to average 296,105 bpd, down from 326,280 bpd in February.  Throughput on the Puget Sound Pipeline is expected to average 136,546 bpd in March, down from 146,833 bpd in February. 


Early Market Call - as of 9:00 AM EDT

WTI - Apr $53.59, down 75 cents

RBOB - Mar $1.4894, down 47 points

HO - Mar $1.6124, down 3.05 cents 


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WTI fell for first time in 5 weeks on rising U.S. production

February 21, 2017

Recap:  Oil futures finished close to unchanged on Friday, with March WTI trading within a $1.31 weekly range, as it fell for the first time in 5 weeks. Pressure was provided by strength in the dollar, bursting U.S. stockpiles and rising U.S. production. March WTI finished the week at $53.40 a barrel, up 4 cents on the day, or 0.07%, but down 0.85% on the week. April Brent tacked on 16 cents, or 0.29%, to settle at $55.81 a barrel.

March RBOB fell less than a cent to $1.517 a gallon, for a loss of approximately 4.6% for the week, while March heating oil ended at $1.636 a gallon, up under a cent for a weekly decline of 1.8%. 

Fundamental NewsOil Movements reported that OPEC shipments will increase by 0.2% to 23.93 million bpd in the four weeks ending March 4th compared with the four week period to February 4th.

Baker Hughes reported that US energy companies added oil rigs for a fifth consecutive week.  Drillers added six oil rigs in the week ending February 17th, bringing the total count up to 597, the largest amount of rigs since October 2015. 

TransCanada is again seeking approval of its Keystone XL pipeline route in Nebraska in the latest move to push the project forward since getting approval from US President Donald Trump.  The energy company said the application it filed with the Nebraska Public Service Commission on Thursday is the clearest path to achieving route certainty, adding that it expects a decision from the commission by the end of the year. 

Enbridge Inc said the Mainline crude oil pipeline system is getting close to full utilization.  It has over 400,000 bpd of expansion opportunities on its Mainline system, in addition to Line 3 replacement project.  The Dakota Access Pipeline could be in service as soon as the second quarter of 2017. 

Iraq's Oil Minister, Jabar Al-Luaibi, said Iraq plans to acquire a large fleet of oil tankers to transport the country's crude to global markets.  The country's tanker fleet was largely destroyed during the US-led offensive to dislodge Iraq from Kuwait in 1991. 

Colonial Pipeline Co is allocating Cycle 13 shipments on Line 2, its main distillate line from Houston, Texas to Greensboro, North Carolina.

Traders said gasoline margins fell by more than 11% early Friday morning, hitting a one-year low on fears of oversupply and weakening demand. 

European diesel refining margins weakened on Friday as imports into the region remained strong.  Strong demand in the Mediterranean continued to attract cargoes from northern Europe, the Baltics and the US Gulf Coast.  More than 1 million tons are expected to reach Europe and the Mediterranean in February.  Exports from the US are expected to be relatively high in February at around 900,000 tons. 

Nigeria's exports of Qua Iboe crude are set to fall to 222,000 bpd in April from 276,000 bpd planned in March.  Loading delays of six to nine days have forced multiple changes to loading plans for the entire year.  Meanwhile, Nigeria's exports of Bonny Light crude are set to increase to 227,000 bpd in April.

IIR reported that US oil refiners are expected to shut in 1.621 million bpd of capacity in the week ending February 17th, cutting available refining capacity by 102,000 bpd from the previous week.  IIR expects offline capacity to fall to 1.116 million bpd in the week ending February 24th and 1.036 million bpd in the following week. 


Early Market Call - as of 9:00 AM EDT

WTI - Mar $54.60, up $1.20

RBOB - Mar $1.5272, up 1.19 cents 

HO - Mar $1.6720, up 3.57 cents 


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Oil futures continued to trade within range agreed upon with OPEC output cuts

February 17, 2017

Recap:  Oil futures continued to trade within the $5 range that had been established as of the agreement between OPEC and other major producers to cut back on output. March WTI climbed aboard the rollercoaster once again, beginning the session on the ascending leg of its three month journey within the aforementioned range, only to freefall to the session's low of $52.68. Prices regained traction as the dollar weakened, March WTI finished the session, up 25 cents, or 0.47%, to settle at $53.36. April Brent settled at $55.65 a barrel, down 10 cents, or 0.18%.

March RBOB settled at $1.525 a gallon, down 2.3 cents, or 1.5%, while March heating oil finished down less than half a cent at $1.629 a gallon.

Fundamental NewsGenscape reported that crude oil stocks held in Cushing, Oklahoma fell by 2 million barrels in the week ending February 13th.

OPEC sources stated that OPEC could extend its oil supply reduction agreement with non-members or even apply deeper cuts from July if global oil inventories fail to drop to a targeted level.  The sources said, producing countries must comply 100% with the supply agreement and growth in demand for crude will have to remain high for global petroleum inventories to fall by about 300 million barrels to the five year average.  OPEC is scheduled to meet on May 25th to decide on supply policy. 

Russia's Energy Minister, Alexander Novak, said Russian crude producers may cut oil production by more than 100,000 bpd this month, more than initially planned under the OPEC deal.  He said Russia will honor its promise to cut oil production and expects other producers to do the same.  He said also Russia will achieve its required 300,000 bpd cut in May and June.  The Oil Minister however stated that Russia may increase its oil exports by between 4% and 5.5% this year to 265-269 million tons. 

The head of Kuwait Oil Co, Jamal Jaafar, said the country is sticking with plans to add 500,000 bpd of oil production capacity as it prepares for the eventual expiration of the output quotas OPEC adopted to help cut the global oversupply.  He said KOC plans to raise the country's oil output from its current level of 3.15 million bpd. 

Iran's Deputy Oil Minister, Amir Hossein Zamania, said the country is currently exporting an average of 2.086 million bpd and 484,000 bpd of condensate. 

Bloomberg reported that Iraqi crude shipments increased by 3% in the first half of February to 3.93 million bpd.  It is 122,000 bpd more than the average for all of January.  Shipments from the southern Iraqi port of Basra increased by 10% while sales by the Kurdish Regional Government increased by 13%. 

Angola's crude oil exports in April are expected to increase to 1.691 million bpd, according to a provisional loading plan.  Angola exported 1.73 million bpd of crude in 2016, down 2% from the previous year.  It exported a total of 631,475,774 barrels of crude at an average of $40.54/barrel. 

Gasoline stocks held in the Amsterdam-Rotterdam-Antwerp hub in the week ending February 16th increased by 22.9% on the week but fell by 3.65% on the year to 1.213 million tons.  Gasoil stocks fell by 2.81% on the week and by 9.99% on the year to 3.081 million tons.


Early Market Call - as of 9:00 AM EDT

WTI - Mar $53.00, down 36 cents

RBOB - Mar $1.4878, down 3.69 cents

HO - Mar $1.6147, down 1.44 cents 


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WTI traded within 30 cents of unchanged on last trading day for March options

February 16, 2017

Recap:  On the last trading day for March options, WTI traded within 30 cents of unchanged; on both the positive and negative side.  Record high crude oil and gasoline inventories pressured prices, while weakness in the dollar provided light support. March WTI was little changed, settling at $53.11 a barrel, down 9 cents, or 0.17%. April Brent settled at $55.75 a barrel, down 22 cents, or 0.4%.

March RBOB rose less than half a penny to $1.548 a gallon while March heating oil settled at $1.631 a gallon, down under a cent. With PADD 1 gasoline stocks reaching a record high, the March gasoline crack has turned lower once again, settling the session at $11.77.

Fundamental NewsThe EIA reported that US crude oil stocks in the week ending February 10th increased by 9.527 million barrels to the highest level on record of 1.213 billion barrels, with crude stocks in the Gulf Coast increasing to a record level of 274.4 million barrels. Gasoline stocks increased to the highest level on record as well, with stocks increasing by 2.846 million barrels to 259.1 million barrels.

A board member with Libya's National Oil Corp, Jadalla Alaokali, said Libya is currently producing more than 700,000 bpd.  He added that the country's production should increase to 1.2 million by August.  The El Feel oil field is expected to resume operations as soon as one month from now, adding 75,000 bpd to the country's output. 

Iran's Oil Minister, Bijan Namdar Zanganeh, said oil export capacity has increased to 2.8 million bpd from about 1.2 million bpd.  Separately, Iran's Deputy Oil Minister Amir Hossein Zamaninia said Iran will decide on at least half of a planned $70 billion in energy projects in a few short months.   

Oman's Oil Minister, Mohammad Al-Rumhy, said oil prices are expected to increase mid-year on output cuts.  He also stated that there is room for non-OPEC countries to cut output further as part of a supply deal agreement with OPEC producers.  He expects Russia's compliance with the agreement to be better in February and March.    

Russian Energy Ministry official, Pavel Sorokin, said the country sees oil prices at $50-$55/barrel this year. 

OPEC will publish a report late February focusing on the stability of the market as it reacts to the organization's output cut and the new US administration energy policy.  The report will help in formalizing a clear policy to help stabilize the global market.  The OPEC ministerial committee monitoring the output reduction will hold its second meeting on February 17th to discuss the February report.  Meanwhile, the report will look into energy policies proposed by the Trump administration.   

Genscape reported that crude inventories in the Amsterdam-Rotterdam-Antwerp area fell by 2.63 million barrels to 55.26 million barrels in the week ending February 10th.

BMI said it revised its Saudi crude production capacity upwards to 11.21 million bpd in 2026 from 10.41 million bpd and compared with 10.33 million bpd in 2017.  Separately, BMI stated that Iraq only managed 40% compliance with the OPEC cuts in January and added that not improving on this could prove problematic to group cohesion.   

North Dakota's oil production in December fell by more than 92,000 bpd to 942,455 bpd, according to the state's Pipeline Authority. 

IIR reported that US oil refiners are expected to shut in 1.652 million bpd of capacity in the week ending February 17th, cutting available capacity by 133,000 bpd from the previous week.  IIR expects offline capacity to fall to 1.274 million bpd in the week ending February 24th. 


Early Market Call - as of 9:00 AM EDT

WTI - Mar $53.47, up 36 cents  

RBOB - Mar $1.5361, down 1.2 cents  

HO - Mar $1.6426, up 1.21 cents  


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U.S. shale output continues to undermine OPEC oil production cuts

February 15, 2017

Recap:  As has been the news for the past several days, oil prices gained as OPEC production cuts slowly continue to eat away at the global oversupply. And as they rose, prices slipped to below unchanged, as U.S. shale output continues to undermine OPEC cuts and a rise in the dollar kept gains at bay. March WTI topped the session at $53.72 before paring gains to settle at $53.20, up 27 cents, or 0.51%. April Brent settled at $55.97, up 38 cents, up 0.68%.

March RBOB finished up 1.2 cents, or 0.8%, to $1.556 a gallon, while March heating oil gained 1.8 cents, or 1.1%, to $1.645 a gallon.

Fundamental News: Genscape reported that crude oil stocks held in Cushing, Oklahoma fell by 50,000 barrels to 65.22 million barrels in the week ending February 10th.  Genscape stated that the Enterprise-operated 400,000 bpd Seaway legacy pipeline has experienced two leaks in the last four months, leading to increasing stocks in Cushing, Oklahoma.

IHS reported that crude and refined product shipments from the US Gulf fell to 3.66 million metric tons on 92 ships in the week ending February 9th.  It is down 12% from the previous week's 4.18 million metric tons on 99 ships. 

According to Bloomberg, preliminary US waterborne crude imports increased by 148,100 bpd to 4.3 million bpd in the week ending February 9th.  Imports in the East Coast fell to 257,100 bpd to 581,100 bpd while imports in the Gulf Coast and West Coast increased by 392,900 bpd and 12,200 bpd, respectively.  Total crude and product imports fell by 240,400 bpd to 5.7 million bpd. 

Iraq's oil exports are expected to fall to a seven month low in March as ongoing maintenance at some of its biggest fields coincides with a seasonal decline in shipments.  Iraq is expected to export 3.01 million bpd of crude from its Persian Gulf terminals, down from 3.64 million bpd in February.  

Libya's National Oil Corp loaded its first crude oil at a new floating storage and offloading vessel in the Mediterranean on Saturday.  The new floating and offloading vessel, Gaza, will be operated by Mellitah Oil and Gas, a joint venture of NOC and Italy's Eni.  Gaza will provide 1.5 million barrels of storage for the offshore field.  Libya's output in January reached 715,000 bpd.  The company plans to lift its moratorium on international investments and is targeting oil production of 1.25 million bpd by the end of the year.

China's General Administration of Customs reported that the country imported 34.03 million tons of crude in January, down 6.5% from 36.38 million metric tons in December despite increasing 27.5% on the year.  China's oil product exports in January fell by 43.2% from December to 3.04 million tons.   

BP's CEO, Bob Dudley, said that US shale oil production will keep a check on any rallies in oil prices.  He sees $55-$60/barrel as a healthy price for crude oil. 

IHS Markit said oil will be in a range from $50 to $60/barrel in 2017. 

ABN Amro cut its first and second quarter Brent price forecast by $5 to $50/barrel.  Its WTI forecast for the first quarter was lowered to $45/barrel.

Federal Reserve Chairwoman, Janet Yellen, signaled the central bank could consider raising short-term interest rates at its next policy meeting in March and sounded an optimistic note on the economy in testimony to Congress on Tuesday.  She said if job gains and rising inflation continue as the Fed expects, an increase in the federal funds rate likely would be appropriate at its upcoming meetings. 


Early Market Call - as of 9:00 AM EDT

WTI - Mar $53.00, down 20 cents   

RBOB - Mar $1.5534, up 69 points

HO - Mar $1.6309, down 72 points   


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Weakness in market pushed oil prices lower on Monday

February 14, 2017

Recap:  Oil prices moved lower on Monday from what appears to be underlying weakness in this market, as increased production in the U.S. continues to work against output cuts by OPEC producers. March WTI stopped on the upside just below $54 a barrel, stemming gains made last week. Prices reversed to the downside as the dollar strengthened, with March WTI breaking below support set by the 30 and 10-day moving averages of $53.23 and $53.10 respectively. This spot contract finished at $52.93 a barrel, down 93 cents, or 1.73%. Brent for April delivery slipped $1.11 or 1.96%, to settle at $55.59 a barrel.

After staging a comeback last week, the March RBOB/WTI crack spread once again pared gains to settle at $11.94, down 96 cents. March RBOB slipped 4.5 cents, or 2.8%, to settle at $1.5446. March heating oil fell 3.86 cents, or 2.3%, to $1.6273 a gallon.

Fundamental NewsOPEC reported that it complied with its output cut agreement by more than 90% in January.  Supply from the 11 OPEC members with production targets under the deal fell to 29.888 million bpd in January.  This amounts to 93% compliance.  Saudi Arabia cut its output to 9.748 million bpd.  OPEC raised its 2017 world oil demand growth forecast to 1.19 million bpd compared with a previous forecast of 1.16 million bpd.  It also raised its 2017 non-OPEC oil supply growth forecast to 240,000 bpd from a previous increase of 120,000 bpd.

OPEC Secretary General, Mohammad Barkindo, said preliminary numbers show a very high level of compliance with supply cuts.  He is confident the supply cut deal will bring down inventories to around 5 year industry average during 2017.  He added that it was too early to say if the supply cut deal needs to be extended beyond June. 

Saudi Arabia told OPEC that it has cut its output by 717,600 bpd in January to 9.748 million bpd, the most in more than eight years.  Saudi Arabia's data indicates that it is producing 310,000 bpd below its specified target.

Kuwait's Oil Minister, Essam al-Marzouq, said current oil prices were good and are expected to increase with higher compliance to an output cut deal agreed to by OPEC and non-OPEC producers.  He added that compliance was 92% while that of non-OPEC producers was 50%.  He urged oil suppliers outside the group to fulfill their commitments to cut output and added that prices will increase once producers demonstrate better compliance with their agreement.   

The UAE's Oil Minister, Suhail Al-Mazrouei, said the country will meet its pledged level of output cuts.  The country will make deeper cuts in production when maintenance starts at the Abu Dhabi oil field in late March or April. 

Venezuela's Foreign Affairs Minister, Delcy Eloina Rodriguez Gomez, said oil exporting countries will continue their coordination to reach final stabilization of the oil market.  She said the oil market will most likely stabilize following the agreement signed in Algiers by OPEC.   

JBC Energy estimates the 11 non-OPEC nations that agreed to cut production by a combined 558,000 bpd during the first half of 2017 have so far cut 147,000 bpd compared with December's levels. 

Nigeria's Vice President, Yemi Osinbajo, said the country lost at least 1 million bpd of oil output as sabotage and attacks on oil installations peaked from 2015. 

IIR reported that US oil refiners are expected to shut in 1.466 million bpd of capacity in the week ending February 17th, increasing available refining capacity by 13,000 bpd from the previous week.  IIR expects offline capacity to fall to 1.224 million bpd in the week ending February 24th. 


Early Market Call - as of 9:30 AM EDT

WTI - Mar $53.62, up 69 cents

RBOB - Mar $1.5691, up 2.45 cents

HO - Mar $1.6515, up 2.39 cents 


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Oil prices finished up on signs that OPEC members are adhering to agreed upon cuts

February 13, 2017

Recap:  Oil prices finished the week on a strong note, on signs that OPEC members are curtailing output by more than 90% of the agreed upon cuts. After reaching its lowest level in 10 weeks, March WTI rebounded 5% to settle at $53.86, up 86 cents, or 1.62%. April Brent gained $1.07, or 1.9%, to $56.70 a barrel, up 4% from its weekly low of $54.44.

The Baker Hughes report showed an increase of 8 for the number of active U.S. oil rigs which kept WTI from settling above the $54 mark, but was not enough to discount the OPEC cuts and the huge build in U.S. crude oil inventories. March WTI settled just above the downward sloping trend line that dates back to Jan 3, 2017.

After reaching a weekly high of $13.70, the March RBOB/WTI crack spread pared gains to settle at $12.90, down 4 cents from Thursday. March RBOB added 1.9 cents, or 1.2%, to $1.590 a gallon, with prices up 2.3% on the week, while March heating oil rose 2.4 cents, or 1.5%, to $1.666 a gallon, down less than 0.1% from a week ago.

Fundamental NewsThe IEA stated that global oil output in January fell as OPEC and non-OPEC producers cut supply to accelerate a market rebalancing.  It reported that oil supplies fell by about 1.5 million bpd in January, including 1 million bpd from OPEC, leading to record initial compliance of 90% with its deal to cut production.  The IEA said if the January level of compliance is maintained, the output reductions combined with strong demand growth should help ease the record stocks overhang in the next six months by about 600,000 bpd.  It also reported that after declining by 800,000 bpd last year, non-OPEC output will increase by 400,000 bpd in 2017 with combined growth from Brazil, Canada and the US amounting to as much as 750,000 bpd.  It raised estimates of global oil demand growth in 2017 by 100,000 bpd to 1.4 million bpd.

Reuters reported that OPEC has delivered over 90% of pledged oil output cuts in January.  Supply from the 11 OPEC members with production targets under the deal in January has declined to 29.921 million bpd or 92% of compliance.

Baker Hughes reported that US energy companies added oil rigs for a 14th week in the last 15.  Drillers added 8 oil rigs in the week ending February 10th, bringing the total count up to 591, the most since October 2015.  During the same week a year ago, there were 439 active oil rigs.

Oil Movements reported that OPEC shipments will decline by 0.7% to 23.95 million bpd in the four weeks ending February 25th, compared with the four week period ending January 28th.

Eni lifted the force majeure on Nigeria's Brass River crude exports which had been in place since late May.  The company official lifted the designation on January 29th.

Saudi Aramco is in talks to sell term crude supplies to China's North Huajin Chemical Industries Group.  If talks are successful, Aramco may start supplying oil to the company in the first quarter.  Initial volumes may be around 30,000 bpd.

Nigeria's Vice President, Yemi Osinbajo, visited the Delta region on Friday as the government sought to broker peace with militants.  Militant attacks on production facilities last year cut output by as much as one-third.  A peace deal could help increase production, with the government aiming to produce an average of 2.2 million bpd this year.  In January, Nigeria's production was 1.7-1.8 million bpd. 

 

Early Market Call - as of 9:00 AM EDT

WTI - Mar $53.12, down 74 cents

RBOB - Mar $1.5610, down 2.83 cents

HO - Mar $1.6285, down 3.74 cents

 

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US gasoline consumption contributed to rise in oil prices

February 10, 2017

Recap:  Wednesday's rise in oil prices continued into Thursday's session on signs that U.S. gasoline consumption is better than expected. March WTI rose to a high of $53.21 prior to slicing gains for a settlement at $53.00 a barrel, up 66 cents, or 1.26%. Brent for April delivery climbed 51 cents, or 0.93%, to settle at $55.63 a barrel.

Production cuts from within OPEC and overflowing U.S. supplies of oil are working against each other and as a result WTI remains within the trading range that dates back to the beginning of December. While the futures market remains range bound, continued cutbacks by OPEC, along with strong gasoline demand in the U.S., could push prices out of the range of $51-$56.

After bottoming at $9.91 on Tuesday, the March RBOB/WTI crack spread retraced 50% of its fall from a high of $16.91 made back in December. This spread touched $13.43 today before paring gains for a settlement of $12.94, up 7 cents from Wednesday. March RBOB settled at $1.570 a gallon, up 1.8 cents, or 1.1%, while March heating oil gained just over half a cent to $1.642 a gallon.

Fundamental NewsGenscape reported that crude oil stocks held in Cushing, Oklahoma in the week ending February 7th increased by 1.2 million barrels to 67.2 million barrels.

Saudi Arabia's Energy Minister, Khalid al-Falih, met Venezuela's foreign and energy ministers, Delcy Rodriguez and Nelson Martinez, respectively, in Riyadh to review oil market conditions and the importance of keeping them stable. 

Iran's crude oil and condensate exports in January increased 3% on the month as it continued to regain market share.  Total estimated export volumes from Iranian ports in January increased to 2.162 million bpd from 2.102 million bpd in December.  Iran's output in January increased to 3.72 million bpd, up 30,000 bpd on the month. 

An Iraqi Oil Ministry statement said five oil wells are still burning out of 25 that Islamic State set on fire in Qayyara, south of Mosul.  North Oil Company crews are working to control the fires torched by the hardline militants to slow down the advance of US backed Iraqi forces toward Mosul. 

Goldman Sachs said oil market re-balancing will take time due to a surprise increase in US production and high fuel inventories.  It sees imports as the key driver to the large builds and as the reflection of the fourth quarter 2016 global oil market surplus of more than 500,000 bpd.  It said the global oil market surplus in the fourth quarter of 2016 led to further rises in global inventories in January and as result the draws that it expects will start from a high base and need sustained cuts to normalize and achieve backwardation, with WTI likely lagging Brent.  It said that given OPEC and other producers are complying at a high level of 85% to their proposed output cuts, the import channel will reverse from March onward.  It stated that US production increased faster than it forecast and it believes the faster shale rebound is creating downside risk to its 2018 WTI price forecast of $55/barrel. 

Euroilstock reported that European crude and oil product stocks in January totaled 1.15 billion barrels, up 1.9% on the month but down 1.5% on the year.  European crude oil stocks increased by 3.2% on the month but fell by 1.6% on the year to 481.73 million barrels while gasoline stocks increased by 3.5% on the month but fell by 1.9% on the year to 122.06 million barrels and distillate stocks increased by 1.2% on the month and by 0.2% on the year to 449.7 million barrels. 

Gasoline stocks held in the Amsterdam-Rotterdam-Antwerp hub in the week ending February 9th fell by 9.62% on the week and by 25.68% on the year to 987,000 tons while gasoil stocks fell by 3.59% on the week and by 10.48% on the year to 3.17 million tons.


Early Market Call - as of 9:00 AM EDT

WTI - Mar $54.02, up $1.02

RBOB - Mar $1.6130, up 4.25 cents

HO - Mar $1.6753, up 3.34 cents


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Decline in US gasoline inventories bolstered futures prices

February 09, 2017

Recap:  After falling to an almost three-week low on Tuesday, oil prices rebounded as unexpected decline in U.S. gasoline inventories bolstered futures prices across the board. Despite the 13.8 million barrel increase, the second largest on record, oil prices reversed early losses to finish the session with a slight gain. March WTI settled at $52.34 a barrel, up 17 cents, or 0.33%. April Brent tacked on 7 cents, or 0.13%, to settle at $55.12 a barrel.

March RBOB futures gained 6.5 cents, or 4.4%, to settle at $1.553 a gallon. March heating oil rose 1.4 cents, or 0.9%, to $1.636 a gallon. With today's rebound in gasoline futures, the March RBOB/WTI crack spread settled at $12.90, $1.49 higher on the day. With gasoline stocks in PADD 1 possibly leveling off, the unseasonable weakness that has been weighing on this spread could be coming to an end. As of now, it appears to be 2 weeks behind the seasonal ascent, so it has some catching up to do.

Fundamental News
The US Energy Department said it will sell 10 million barrels of sour crude from the SPR.  The sale was mandated by a law passed last year to increase medical research funding that calls for the sale of 25 million barrels over three years, starting with the sale of 10 million barrels this year. 

Saudi Aramco will supply full contract volumes of crude oil to two Asian buyers in March. Separately, Saudi Arabia's crude oil supplies to Japan increased to a 10 year high in 2016.  Saudi Arabia's crude supplies to Japan last year averaged 1.18 million bpd, up 4.7% on the year and accounted for about 36% of Japan's total imports of 3.31 million bpd.  Coupled with spot supplies from Saudi Aramco's leased storage in Okinawa, Japan's crude imports from Saudi Arabia increased in 2016 on the back of the country's response to incremental demand for its oil, despite no increase in term import contractual volumes.  Saudi crude supplies to Japan are expected to remain high in 2017, supported by occasional spot shipments out of state-owned Saudi Aramco's leased storage in Okinawa. 

Qatar's Energy Minister, Mohammed al-Sada, said higher oil prices may increase shale oil production but added that the global oil market can accommodate this as demand remains healthy.  He also stated that it is too early to say whether the agreement between OPEC and non-OPEC producers needs to be extended beyond six months, but stated that the market is responding positively to the deal.   

Goldman Sachs said the US gasoline surplus is driven by transient excess supply, not demand weakness.  It stated that going forward, we expect that current low forward margins, seasonally higher turnarounds and sustained demand growth will lead to gasoline inventories normalizing.  Goldman Sachs said it is keeping its strong global demand growth for gasoline unchanged. 

US Census data showed that the US exported 371.2 million liters of ethanol in December, down 19.6% or 90.5 million liters from November. 

Genscape reported that gasoil stocks in the Amsterdam-Rotterdam-Antwerp terminal in the week ending February 3rd fell by 4.9% to 6.033 million tons.  It was the first decline after six weeks of builds. 

Plains All American Pipeline said crude production in the Permian Basin could reach 3.5 million bpd by 2020 and potentially surpass that level depending on how many rigs are added.  It estimated 18-20% production growth for the Permian Basin in 2017.  Plains' forecast assumes an average US crude price of $55/barrel. 

IIR reported that US oil refiners are expected to shut in 1.415 million bpd of capacity in the week ending February 10th, reducing available refining capacity by 378,000 bpd from the previous week. 

Early Market Call - as of 9:00 AM EDT

WTI - Mar $52.98, up 64 cents 

RBOB - Mar $1.5648, up 1.15 cents 

HO - Mar $1.6522, up 1.62 cents


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Oil prices fell as U.S. shale production continues to increase

February 08, 2017

Recap: Losses in oil prices were extended on Tuesday, as prices were weighed down by strength in the dollar, rising U.S. shale production and falling RBOB prices. In post settlement trading, and after the release of the API numbers, which showed a build of 14.2 million barrels in U.S. crude oil stocks, oil futures fell 54 cents, reaching a low of $51.63 a barrel. Settlement was $52.17, down 84 cents, or 1.58%. April Brent slipped to a low of $54.63, down 1.9% in post settlement trading. This spot contract settled at $55.05, down 67 cents, or 1.2%.

Traders have turned their focus back to U.S. gasoline stocks, which are approaching record levels. Tomorrow's inventory report is expected to show an increase of 1.1 million barrels in stockpiles. The March RBOB/WTI crack spread, which has been on a steady decline since the middle of January, fell to a low of $9.97 on the day prior to trimming losses for a settlement at $11.25. March RBOB fell 4.3 cents, or 2.8%, to $1.510 a gallon and March heating oil lost 3 cents, or 1.8%, to $1.635 a gallon.

Fundamental News: Genscape reported that crude oil stocks in Cushing, Oklahoma increased by 600,000 barrels to 64.7 million barrels in the week ending February 3rd.

Iran's Oil Minister, Bijan Zanganeh, said OPEC should cut crude production a bit more in the second half of 2017.  He also stated that all OPEC members agree that oil should be $60/barrel. 

The EIA reported in its Short-Term Energy Outlook that global liquid fuels consumption is expected to increase by 1.62 million bpd to 98.09 million bpd in 2017 and by 1.46 million bpd to 99.55 million bpd in 2018.  It also reported that OPEC production is expected to increase by 530,000 bpd to 39.55 million bpd in 2017 and by 660,000 bpd to 40.21 million bpd in 2018.  US oil production is expected to increase by 100,000 bpd to 8.98 million bpd in 2017 and by 550,000 bpd to 9.53 million bpd in 2018.  Meanwhile, US oil demand is estimated to increase by 260,000 bpd to 19.84 million bpd in 2017 and by 330,000 bpd to 20.17 million bpd in 2018.  Gasoline demand is expected to remain unchanged at 9.29 million bpd in 2017 and increase by 70,000 bpd to 9.36 million bpd in 2018 while distillate demand is expected to increase by 80,000 bpd to 3.93 million bpd in 2017 and by 110,000 bpd to 4.04 million bpd in 2018. 

The Trump administration has given its final approval to the Dakota Access Pipeline, according to a court filing issued on Tuesday.  The US Army Corps of Engineers said that the department was planning to issue an outstanding easement under a river in North Dakota that was holding up construction of the oil pipeline. 

Iraq's South Oil Co. said the country's Basra oil export terminal will stop loading operations for 24 hours, starting midnight Tuesday, for work to install a new pipeline feeding the facility.  The terminal's loading capacity is estimated at around 1.8 million bpd.  

According to cFlow, S&P Global Platts trade flow software, about 710,000 metric tons of distillates loaded from the US Gulf Coast has discharged or are set to discharge in Northwest Europe and the Mediterranean basin in February. 

According to Bloomberg, preliminary US waterborne crude imports fell by 1.3 million bpd to 3.7 million bpd in the week ending February 2nd. 

IHS reported that crude and refined product shipments from the US Gulf increased to 4.18 million metric tons on 99 ships in the week ending February 2nd. 

Data from the US Census Bureau showed that US crude oil exports fell to 442,000 bpd in December compared with 597,000 bpd in November. 


Early Market Call - as of 9:00 AM EDT

WTI - Mar $51.71, down 46 cents  

RBOB - Mar $1.4852, down 21 points

HO - Mar $1.6215, down 6 points  


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