Stocks & Oil Markets Take a Wild Ride Into 2016

Posted by Kelly Burke on Jan 6, 2016 3:25:23 PM

Line charts depicting the stock market scattered on a table

The last day of trading in 2014 saw Crude close out at $53.27/bbl, which was down 45% from the prior year. 2015 continued the trend with WTI dropping another 30% over the year - with December 31, 2015 settling out at $37.04.

This week we crashed down through the $35-36 dollar support levels and are rapidly approaching the next one of $32.50/bbl after todays tumble resulted in Crude closing out at $33.97/bbl.

Let's take a step back and look at what went on this week to push oil prices down 8% since December 31st.

Monday, January 4th, markets initially shot up with ULSD and RBOB both jumping over a nickel by 10am (+.0516 and +.0576, respectively), before almost immediately changing course - both products were down by noon to flat on ULSD and only up .0156 on gas. So what happened?

Monday brought the news that the Saudi's had cut all diplomatic ties with Iran and ordered all Iranian diplomats to leave the country within 24 hours. This was in response to the Kingdom executing 47 people over the New Years weekend, including and most importantly, a renowned Shiite cleric, which prompted riots and vandalism to the Saudi embassies in Iran and Bahrain. 

As the day went on however, the analysis of the story moved from fear of international conflict bumping up cost over supply disruptions, to the realization that the standoff between Iran and Saudi Arabia meant that this could essentially be the death knell for OPEC. As far as the bears see it, this breakdown of relations essentially guarantees the Saudis will not take any moves to cut production in order to stabilize pricing, because to do so would greatly help Iran, in that the newly allowed exports they promise to flood the markets with would generate them much more revenue. 

Economic data from China Monday supports the bears as well. It was a factor in pushing down oil prices, as well as being responsible for crushing European markets and resulting in the single worst year opening for the Dow Jones since 1932. Overnight, Chinese stocks crashed over 7% and led to a halt in trading across the board - a halt that didnt come soon enough not to pummel stocks internationally. One can only hope the old Wall Street adage "As goes January, so goes the year" is wrong this time. 

There was some bouncing around Tuesday, particularly on the overnights as investors and analysts weighed the API projections that predicted draws in Crude stocks to be announced Wednesday. However, today's EIA report showed just the opposite, and swiftly tanked the market across the board. At the close, ULSD lost -.0446 to settle at 1.0807, RBOB shed almost ten cents (-.0949) to close at 1.1618 (very close to the $1.10 support level) and Crude settled down $2 at $33.97.

What next? Bears are predicting oil hits and potentially breaks through the $32.50 support level for a brief stint in the upper 20's ($28 range), while the Bulls are predicting a jump back to the $37 level. We shall see. 

Stay Tuned!

 

Read More

Topics: Iran, EIA, CRUDE, OPEC, API report, FED rates

Distillate Inventories Carry Futures Higher

Posted by Mark Pszeniczny on Nov 20, 2013 5:25:00 PM

Last night API's set the early tone for todays rice action as preliminary numbers showed large draws in distillates.  Those numbers were confirmed this morning with the EIA releasing a staggering 4.8mbl draw in distillates vs expectations of a mere 700k.  Gasoline was down slightly at 345k and Crude showed a slight build at 375k bls.  On the surface it appears distillate demand is on the rise, not only in the US, but also from an export position.  Soon after the data released, pits jumped almost .04, and stayed in that range for most of the afternoon.  Supporting the bullish price action was FED meeting minutes which appear to confirm last weeks chatter that we will start to see some significant unwinding of the Bond buying program in the months to come, as well as a positive retail report for October.  The hope is that a positive October doesn't turn into a lackluster November and December which is often the case in the retail world.  News hit mid afternoon of US-Iranian talks ended almost as quickly as it started, one report said the talks lasted less than 10 minutes with few words spoken.  Even with the draw in distillates, the market appears to be well supplied as Crude actual lost .01 to close out at $93.33, RBOB added .0235 to $2.6630 and HO led the gainers settling up .0487 to $2.9545.  Again, well within its comfort zone.

RBOB Close
                      CLOSE     CHANGE            
DEC   2.6630         +.0235
JAN   2.6458         +.0259
FEB    2.6483        +.0257
MAR    2.6609         +.0253
APR    2.8241         +.0239
           MAY   2.8209         +.0227         
HEAT Close
      CLOSE            CHANGE
DEC   2.9545    +.0487
JAN   2.9528     +.0464
     FEB    2.9503     +.0431   
 MAR   2.9449     +.0397
APR   2.9355    +.0361
 MAY   2.9267    +.0327
 

 

 

Line graph

Read More

Topics: Iran, EIA, API report, Inventory Draws, FED rates

NYMEX sways with data and storm

Posted by Mark Pszeniczny on Aug 24, 2011 5:24:00 PM

A slew of data today had Futures up strong for much of the day while gasoline danced around the flat area as it decided how to digest all the news.  First and foremost, any hurricane premium added to the market kept prices lower as Irene appears to be slicing it's way towards New England.  Good for the Oil industry, not so good for our neck of the woods.  Landfall is now expected to be Sunday night or Monday morning with potential of a CAT 3 hurricane.  Inventories released today where also actually slightly bearish as compared to API's last night.  The Crude draw of 2.2 mbls was substantially less than the 5 mbl draw reported last night.  Gasoline and distillates also added 1.7mbl and 1.4mbl respectively.  As reports of Junes durable goods orders being a modest 4% increase hit the wires, a fresh round of buying hit the pits as this is a good sign of an improving economy, but muting that news was a weakening housing report that showed values dropping yet again.  All eyes will now be on Friday as the FED is expected to speak again.  At the close, Crude actually lost .28 to $85.16 while RBOB added a mere .0018 to $2.8784 and HEAT gained .0182 to $2.9607.
heat map
RBOB CLOSE
                 CLOSE       CHANGE 
  
SEP    27884       +.0018
OCT    27558     +.0086
NOV    27118     +.0113
DEC   26902       +.0121
JAN    26907       +.0129
FEB    27008      +.0133
HEAT CLOSE
          CLOSE    CHANGE
SEP    29607    +.0182
OCT   29690     +.0198
NOV    29761      +.0202
DEC   29825     +.0207
JAN   29901       +.0216
FEB   29876       +.0218
Read More

Topics: Hurricane Irene, API report, Futures Soar

NYMEX surges to new highs

Posted by Mark Pszeniczny on Jan 26, 2011 10:06:00 PM

Futures skyrocketed higher today hitting fresh highs on the heels of optimistic feelings about the economy.  After the feel good State of the Union speech, a speculative rally ensued early on and never looked back.  All this amid a very bearish Inventory report that totally contradicted the API’s and most estimates. Crude supplies added 4.8mbls, gasolines rose 2.4mbls and distillates fell only 140k, a stark contrast to the 5mbls projected by the API’s.  The rally carried over into the equities as well that saw the DOW crest above the 12,000 mark for the first time in almost two years.  With the FED saying the economy needs a $600 billion bond buying program; it was somewhat surprising to see the rise.  Ultimately the pressure put on the dollar today appears to be the underlying fuel for the speculative run.  As New England braces for another round of snow and cold, I would not expect to see any decisive moves in either direction in the short term.  At the Close, Crude added $1.14 to $87.33, RBOB soared .0879 to $2.4306, erasing yesterdays losses and HEAT jumped .0769 to $2.6698.

Read More

Topics: The Market, API report, NYMEX

DOE’s tempt Futures to sell off

Posted by Mark Pszeniczny on Dec 8, 2010 9:55:00 PM

You wouldn’t know it from looking simply at the closing figures that todays inventory report was initially viewed as wildly Bearish.  Confirming last nights API report with a draw of 3.8mbl in Crude, a build of 3.8mbl in gasolines and a build of 2.2mbl in distillates, pits tanked over 3 cents down around 10:30 this morning.  The losses were short lived however as others focused on demand numbers that showed some strength.  Additional reports of severe cold stretching from Northern Maine to South Florida fed the mid day rally that had HEAT pits dancing in  positive ground after lunch.  Again, on the surface, it appears the NYMEX wants to go lower, and the $90 resistance level of Crude appears to be holding.  But as to why we are not seeing the dramatic falls, like we saw the dramatic rises are beyond my explanation.   Even with the large draws in Crude, inventories are still well above last year and a lofty 25mbl over the three year average.  As I have said it appears Fundamental analysis is dead.  At the Close, Crude slipped .41 to $88.28, RBOB lost .0184 to $2.3046 and HEAT fell only .0095 to $2.4607, this after touching the $2.43 level earlier in the day.

Read More

Topics: The Market, API report, NYMEX, Distillates Build

Futures shrug off DOE’s, end higher

Posted by Mark Pszeniczny on May 26, 2010 8:39:00 PM

In what appears to be an about face to recent trends, the Pits reacted strongly overnight to yesterdays API report that showed Gasoline taking a whopping 3.2mbl hit. That message was contradicted this morning with the official DOE report that showed Crude build by 2.4mbl, Gasoline fall by only 200k bls and distillates draw by 267k barrels. The rather bearish report, when compared to estimates that had Crude only adding 250k barrels, was pushed aside as value seekers jumped on an already fast moving train. So much so that right after the report was released, again this is bearish news, the markets jumped higher. The length that was shed over the last few weeks appears to be burning a whole in the pockets of the funds. Or they could simply see this as buying opportunity as they did in late January. Again with Front month HEAT touching, but not breaking that 100% retracement level, expect to see sideways action until the next round of economic news is released. Many will focus on the Far East and their economic health as well as the tie to the dollar. At the close, Crude vaulted $2.76 to $71.51, RBOB rose .0396 to $1.9704 and HEAT gained .0490 to $1.9207.

Read More

Topics: DOE, HEAT, CRUDE, The Market, API report

Supplies rise and so does NYMEX??

Posted by Mark Pszeniczny on Apr 21, 2010 8:05:00 PM

After last nights wildly bullish API report that had all products showing healthy draws, we were expecting the worse this morning. As DOE’s broke and showed builds across the board, the very bearish report did little to curb the enthusiasm of players. Initial reaction had all the pits shed early gains and prior to the lunch hour most were trading in the red. It was truly an odd day as investors appear to be looking at gasoline demand and how that will affect summer pricing. Psychologically, with MAY Crude falling off the board today, it firmly puts in our heads that summer is here. How much of todays move on HEAT was attributed to European flights resuming remains to be seen. At the Close, JUN Crude fell .17 to $83.68, RBOB added .0018 to $2.2827 and HEAT showed the most strength adding .0256 to $2.2058. However bizarre today was, I would have to think that if there was a little more time in the day all products would have closed negative. Outside influences have overtaken fundamentals currently and when that happens, we usually see a breakout in one direction or the other.

WEEKLY INVENTORY NUMBERS

Crude +1.894

Gasoline +3.587

Distillates +2.096

Utilization 0.3%

Read More

Topics: DOE, API report, NYMEX, weekly inventory numbers

Recent Posts

Posts by Topic

see all