The Bears Have It - EIA Report Slashes Tuesday's Gains

Posted by Kelly Burke on Nov 4, 2015 3:22:39 PM

Downwards aiming arrow with the terms WTI, Oil and Brent inside of it

Today's EIA Inventory Report indicated that Crude Inventories were up 2.8 million barrels for the week ending October 30th, and the market reacted accordingly. API had forecast a build as well, so prior to the EIA release we were trending down about 1%, which accelerated to over 3% once the official numbers came out. 


A few interesting notes about the build - it occurred due to a domestic production increase of 48,000 bpd to 9.16 million bpd. This increase happened despite the Baker Hughes announcement that rig counts dropped another 16 to the lowest level since 2010, and despite US imports falling to their lowest weekly level since 1991. (Down to 6.4 million barrels per day, if you're keeping score at home.)

It also happened despite the fact that every single issue that spiked the market yesterday is still very much in play. The Libyan port is still closed under occupation. The Brazilians are still on strike at PetroBras. The Colonial pipeline's Houston facility is still flooded and not allowing any deliveries or originations to occur. (You can get a recap of yesterday here: Monday sinks on Demand, Tuesday Surges on Supply )

And yet here we are, narrowly missing a complete reversal of yesterdays surge across the board. 

Gasoline was projected to show a 1 million barrel drop, but instead dropped 3.3 million barrels - yet RBOB settled down -.0536, not quite erasing yesterday's 7 cent jump but coming close, considering the drop in inventory should in theory have pushed gas further ahead. 

Distillates did the reverse of gasoline stocks - they were projected to drop 1.8 million barrels, but instead dropped 1.3. ULSD closed down .0625 to 1.5035, more than erasing yesterday's jump of just under 6 cents. 

The October Jobs report is likely the next major news for the market, due out Friday. Maybe we will get lucky and get a breather tommorow. One can always hope. 

 

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Topics: RBOB tumbles, CRUDE, EIA Inventories, oil glut, Jobs Report

Wild Week on Wall Street & The NYMEX; Everything Keeps on Tumbling!

Posted by Kelly Burke on Dec 10, 2014 5:43:25 PM

Stock market numbers on a digital board

Today was another wild day on the market, with ULSD closing down another .0376 to 2.0464, and RBOB closing out down a whopping .0818 to 1.6418. Analysts are crediting this with an "unexpected" increase in Crude stockpiles. WTI fell -2.60/bbl to 60.94, well below the previous 5 year low.

Monday was down as well, closing out -.0529 on ULSD and -.0668 on RBOB gasoline.

We saw a small jump up yesterday (ULSD +.0291 and RBOB +.0170) - likely just a bump-in-the-road overcorrection to stocks tanking on some bad news from Greece and China. This week saw Greek markets tank worse than they did before the crash a few years ago - obviously not good news for the European economy. 

OPEC also became a factor again with Iran railing against falling oil prices as a "conspiracy" and OPEC cutting its output estimate for 2015 to 2.89 million barrels per day, 300K lower than they originally forecast. However, despite the announcement Crude keeps right on plummeting. 

Wall Street Traders have been shouting about the Dow's inevitable march to 18,000, but today saw it close down for the third day in a row. Continuing pressure on stocks given that Fed rate hikes look like they may happen within the 6 month period doesnt bode well for the 18K mark, especially when you factor the weakness in foreign markets into the equation.

The S&P slumped on energy stocks as well, as some companies came out with plans to move on layoffs, restructuring, or selling shale plays. Despite a few plays going up for sale though, production domestically doesnt seem to be slowing down. However, a slow down in production in countries that have a high production cost is probably inevitable if the price hits a certain level - that includes the US and Venezuela. 

So it was a tough week for Wall Street, but the bright spot was for the average consumers as downward pressure keeps pushing down the price of gasoline. The Energy Department dropped its price forecast for retail gasoline to for next year at this time to $2.60/gallon, the second time its been revised down by over 30 cents a gallon since oil began its slide. Another bright spot domestically was an unexpectedly good jobs report on Friday, which is a good signal for the overall economy. 

 

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Topics: Greece, RBOB tumbles, OPEC, NYMEX, Wall Street

NYMEX Tanking Despite Inventory Draws

Posted by Kelly Burke on Nov 13, 2014 2:20:00 PM

Line charts depicting the stock market scattered on a table

 

The EIA inventory report for the week ending November 7 showed draws in Crude & Distillates, with a build in gasoline. Crude drew down 1.7MMb and distillates drew down 2.8MMb, while gas built 1.8MMb.

Watching the screen though, you wouldnt think we showed draws - ULSD and RBOB are both dropping like the proverbial stone - both products had intraday lows well over 6 cents, with gas dropping down 8 for a few. 

UPDATE - ULSD close 2.3621 (-.0848) and Gas -.1054) - Yikes!! January& February gasoline closed under $2 at 1.9827, and 1.9899, respectively

So whats going on? Why even with a draw down on products, and once again heightening tensions in Russia/Ukraine are commodities dropping?

The jobless number report was higher than anticipated by about 10,000, but the numbers are still are hanging near a 14 year low so that ought not be a huge factor in either commodity numbers, or the stock market. The stock market, by the way, is retreating a little from it's record highs and hanging flat on the back of falling energy shares once again, due to falling prices. 

We still are in the same situation with OPEC and American production being sky high, and global demand due to economic growth being anemic at best, so the dismal supply demand situation is still at play.

Going out on a limb I would credit the extra oomph of todays drop off to lots of news regarding Keystone - with a bill being pushed through to the Senate that will actually make it to the floor, things are being shaken up on the energy front. Word is, in an attempt to save the seat of Landreiu, from Louisianna, who faces a runoff election challenge next month, Senate leader Reid has agreed to allow the legislation to the floor. 

Although most talking heads seem to think Obama will veto - still, the implication is that the midterms probably will be forcing some of the top energy agenda items through, and thats good news  - unless of course you fixed high, in which case dropping energy prices might start hitting you in the wallet very soon. 

How low can we go?

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Topics: Keystone XL, RBOB tumbles, NYMEX, Crude draws, EIA Inventories

NYMEX Continues Losing Streak Despite New Middle East Concerns

Posted by Kelly Burke on Jul 9, 2014 2:59:42 PM

Line charts depicting the stock market scattered on a table

By the Numbers:

Monday marked the 7th straight session oil futures dropped, which is the longest we had seen since December of 2009. Tuesday accelerated the drop off, with ULSD closing down -.0409 and RBOB dropping -.0161 to 2.9729. 

This morning it appeared US Crude may erase some of the drop off over Israeli/Hamas fighting that has erupted this week, but the downward trend has continued - albeit less rapidly. ULSD closed off 25 points to 2.8711 and RBOB closed down -.0352 to 2.9377

Whats Going On:

The spikes we saw in June mainly stemmed from concerns about the Iraqi/ISIS conflict and subsequent fears of interrupted supply. So far though, exports from Iraq have remained stable and uninterrupted, which has let prices ease off. Even European Brent Crude has gone back to pre-Iraqi tension levels. 

Also - remember those Libyan ports that were seized by rebels last July and have remained offline since? Well it looks like they will finally be coming back online, which could up Libyan exports by up to 800,000 barrels per day. The caveat here though, is prior discussions on moving Libyan exports back up have fallen through, so theres no guarantee on what production levels they'll actually hit.

What to Watch For:

The potential storm cloud on the horizon is the Israel vs. Hamas situation unfolding. Palestinian officials are reporting over 35 killed and 300+ wounded in Gaza  as a result of Israeli airstrikes. The strikes have reportedly hit over 450 locations in Gaza, while Hamas has launched rockets far deeper into Israel than before - hitting tech centers, Tel Aviv and northern counties. Israel is reporting that since Monday afternoon, over 200 rockets have been fired at the country, in addition to over 50 that were shot down by drones before impact.

Israeli Prime Minister Netanyahu has reached out to the UN & US to condemn the Palestinian action, while some newspapers are reporting that Palestinian President Abbas has reached out to the Egyptian President to moderate discussions for a cease fire. 

The situation arose from three Israeli teens being kidnapped and murdered last week - which Israel blames Hamas for, and the subsequent murder of a Palestinian teen, which Hamas claims was retaliatory action by the Israelis.

As we've seen a thousand times before - violence escalation in the Middle East almost always causes fear based price increases. Luckily, we saw no such movement today, as the market continued decline. Markets aside, hopefully the situation comes to some sort of resolution soon - preferably a long standing agreement that will stop the unecessary violence in the area.  

 

 

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Topics: RBOB tumbles, Libya, Iraq, ISIS, Hamas, Israel

NYMEX Tumbles as Markets eye Italian Election

Posted by Mark Pszeniczny on Feb 26, 2013 5:08:00 PM

Bears were out in full force today (actually saw them hit after the close on Monday) as all eyes were watching election results in Italy.  No clear cut winner has been announced thus casting doubt and uncertainty on recently passed austerity measures.   The effect saw the US Dollar rise against the World basket forcing Commodities to fall harder than Tom Brady's Agents Commission check.  Adding to the sell off was increasingly better news from the housing market with December values showing a .2% increase and 6.8% increase year on year.  All this and as I walked into a lunch saw Fed Chief Bernanke on a big screen TV saying the economy is far better off than in recent years and that the FED is currently looking at ways to end its quantitative easing policies.  Today had a flurry of news to push pricing down, but I still hang my hat on  the saying "high prices is the cure for high prices"  as we exit the heating season in the Northeast and some retail stations above $4.00 a  gallon,  some would say the US economy would struggle to support these energy costs.  At the close, Crude lost .48 to $92.63, HEAT fell .0672 to $3.0317 and RBOB tumbled .0795 to $2.9816. 

Italian heat chart

RBOB CLOSE
                 CLOSE       CHANGE 
  
MAR       29816       -.0795
APR        31988      -.0648
MAY      31617      -.0625
JUN         31035      -.0604
JUL          30450       -.0583
AUG        29872        -.0560
 
HEAT CLOSE
          CLOSE    CHANGE
MAR        30317      -.0672
APR        30268      -.0713
MAY       31139     -.0672
JUN        30862      -.0645
JUL        30704        -.0622
AUG       30576     -.0594
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Topics: Commodities, Italian Election, RBOB tumbles, Dollar Strengthens

Futures Dip as GDP Report Shows Flat Economy

Posted by Mark Pszeniczny on Jul 29, 2011 5:12:00 PM

Last week we mentioned that it was going to be a sloppy back and forth week if a debt ceiling resolution was not passed.  As shown below, that was exactly what materialized.  Starting the week, HEAT was at 3.1280 and finished today at 3.0962 with all sorts of gyrations in between.  As traders are not willing to commit either way as a resolution  still looms and a tropical storm hitting the gulf region, it was somewhat surprising to see the market fall off as much as it did mid session.  Both products were down as much as 4 cents on the heals of GDP data being released which showed the economy was basically flat.  Furthermore, it notes that the recession  was deeper than first thought and the economy is obviously growing at a much slower rate.  There is growing sentiment that we will begin to encounter demand destruction at a growing rate if prices do not ease relatively quickly. At the close Crude fell $1.74 to $95.70, RBOB lost .0047 to $3.1129 and HEAT fell .0090 to $3.0962. This weekend will be critical as to how the Markets will shake out for the next few months, as a resolution should see lower prices

heat chart

RBOB CLOSE
                 CLOSE       CHANGE 
  
AUG    31129       -.0047
SEP    30579      -.0059
OCT    29211     -.0129
NOV   28852       -.0148
DEC    28691       -.0152
JAN    28708      -.0153
HEAT CLOSE
          CLOSE    CHANGE
AUG  30962     -.0090
SEP   30994       -.0150
OCT    31130      -.0156
NOV   31282      -.0169
DEC   31429       -.0176
JAN   31570       -.0183
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Topics: GDP, Debt Ceiling Resolution, RBOB tumbles, CRUDE falls

Futures plunge on dollar, data and demand

Posted by Mark Pszeniczny on May 11, 2011 10:08:00 AM

LADIES AND GENTLEMAN, PLEAS KEEP YOUR HANDS AND FEET INSIDE THE ROLLER COASTER AT ALL TIMES!  What else can you say about the last several sessions that has seen 25 cent drops, 30 cent rises and another 25 cent drop.  Overnight saw big drops on gas as what appeared to be an overbought speculative position put on Monday and Tuesday get sawed off as fears resurfaced that the European Union might not be willing just yet to jump in and help Greece. The subsequent reaction was a large jump in the Dollar, pushing commodities to the floor.  So much for those tight supplies due to flooding?  Bearish inventory data pushed the NYMEX down even further as Crude gained 3.8mbl, distillates fell by 800k and gasolines rose 1.3mbl as most were expecting moderate draws.  For the first time since Rita and Katrina days, the Trade was halted as RBOB losses pushed over 25 cents.  At the close, Crude tumbled $5.67 to $98.21, HEAT lost .1029 to $2.8983 and RBOB  lost and astounding .2569 to $3.1228.   At the end of the day, most were looking at demand figures that showed drops across all products, furthering the notion that Americans are either unwilling or unable to support retail fuel over $4 per gallon.   

heat chart
RBOB CLOSE
                 CLOSE       CHANGE 
  
JUN    31228       -.2569
JUL    30417       -.2121
AUG    29778        -.1800
SEP    29331       -.1567
OCT     27755       -.1373
NOV    27405      -.1330
HEAT CLOSE
          CLOSE    CHANGE
JUN    28983      -.1029
JUL    29123      -.1022
AUG    29262      -.1018
SEP     29426      -.1011
OCT    29587       -.1003
NOV   29740       -.1006
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Topics: Greece Bailout, RBOB tumbles

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