Energy Market Updates

NYMEX Slows Acceleration after Yesterday's Spikes

Posted by Kelly Burke on Apr 16, 2015 3:51:34 PM

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Today the NYMEX settled out much more reasonably than yesterday, with ULSD finishing off up .0192 to 1.908, and RBOB settled down 6 points to 1.9354. 

Yesterday was another story however, with prices shooting up on the lower than anticipated stock levels in this weeks EIA storage report. Crude was up over 3% shortly after the report, a little before 11am. At the close, ULSD ticked up .0871 to 1.8888 and RBOB shot up a solid dime to 1.936. 

In addition to the EIA report, there's been more grumblings on production cut backs from OPEC, although as usual the Saudi's are holding firm. The Saudi position is starting to seriously impact US production - hence the lower than anticipated numbers on the EIA's report, and the resultant market freak out. 

As of last week the US Crude inventories were at their 80 year high, so the reaction seems somewhat extreme. However, the actual numbers were about 30% of the projected increase so that obviously caused some concern about how hard the impact from another huge OPEC production month really is. Also, once again these events coincide with rumblings from the Fed on economic policy, specifically the interest rate level as well as continued problems in Yemen.

Deja vu all over again. 

Stay Tuned!

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Topics: NYMEX, FED rates, EIA Inventories, yemen

Job Reports, Inventories & International Issues Keep Volatility Going

Posted by Kelly Burke on Apr 3, 2015 1:27:07 PM

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It's been a while, so while the markets closed today, lets take a quick look back at whats been happening (some "light reading for your Friday afternoon)

The economy -

After positive reports in February, the March jobless numbers released today were something of a dissapointment. Only 126K jobs were added, which broke a 12 month streak of 200K+ jobs per month being added. This raises some eyebrows on the state of the economic recovery but some analysts are blaming the extended winter, arguing that the normal pick up in seasonal and construction industry jobs is simply delayed because of the cold. 

This lackluster jobs number, however, will once again probably have Wall Street see-sawing over speculations on the Fed interest rates, its probably unlikely to happen soon (I know, deja vu) given the weakness of the report. With the market closed today though we won't see what if any impact this will have until next week.

Commodities and Pricing

This weeks EIA report for the week ending March 27th showed Crude Inventories at record highs for the 12th straight week (+4.8mmb to 471.4mmb). Gasoline dropped 4.3mmb, way over analyst predictions of a less than 1mmb drop. We've seen stronger than expected demand in gasoline, particularly in January and thats sort of underlying its volatility at the moment - if you recall, RBOB jumped .0612 Wednesday on the report, but then pared the gains on Thursday, closing out -.0699 to 1.7613.

The main underlyer on the volatility over the past few weeks is more politically driven - we saw jumps on the NYMEX when it was announced that Saudi Arabia had begun airstrikes on Yemen. Additionally, the Iranian nuclear deal has some traders and speculators on edge, and continuing issues with ISIS and the ongoing strikes against them are keeping Middle East tensions higher than we'd all like to see. Luckily for the most part, days we've seen spikes on international turmoil have usually been reversed with a few days. It's likely this will continue unless there's some real movement or resolution on any of the aforementioned issues. Til then, hold onto your hats and enjoy the ride!

 

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Topics: Iran, Jobless numbers, EIA Inventories, saudi arabia, yemen

Reminder: Vermont Tax Change Effective Tomorrow 4/1

Posted by Kelly Burke on Mar 31, 2015 12:39:03 PM

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The Vermont Motor Fuel Transportation Infrastructure Assessment Fee will be $0.0398 per gallon, down from $0.0547 per gallon, effective tomorrow, April 1st 2015. 

If you have any questions about how this impacts your business, don't hesitate to reach out. 

Thanks!

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Topics: vermont, tax change

Inventories and Saudi Market Moves Continue to Push Oil Prices Down

Posted by Kelly Burke on Jan 28, 2015 3:13:24 PM

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Oil continued downward today on the back of the EIA inventory report for last week that indicated Crude stockpiles were up 9mmbl to a record high of about 407mmbbls. At the close, Crude dropped below $45/bbl, -1.78 to 44.45. ULSD and RBOB closed lower as well, ULSD settling down .0310 to 1.6318, and RBOB settled down .0051 to 1.345.

In addition to the inventory report, as we mentioned, the new Saudi leader has indicated the largest OPEC producer will continue on its track to hit production goals set. Both of these factors mean traders are still concerned with longterm over supply, which is continuing to drive down prices.

The Saudi stock market shot up today as well on rumors of relaxing restrictions on foreigners trading that market. This ties back to the oil oversupply, in that most are crediting the Saudi's potential move of opening the market up as a way to raise revenue and stimulate the economy in the non-energy sectors, which indicates further that the current oversupply will be a long term situation.

In other news, the House today passed a bill to expedite the process for permitting LNG exports. With the increase in US Nat Gas production (the US is currently the worlds top producer), the thought is exporting would not only be economically beneficial for the US but exporting to Europe could reduce the essential monopoly Russia has on natural gas supply in those nations. 

At the same time that passed the House, a Keystone bill continued to languish in the Senate when the attempt to pass a procedural motion to push the vote failed Monday. One of the ammendments to the current bill is a proposal to eliminate the ethanol mandate portion of the RFS - this will be an important one to watch, certainly.

Stay tuned!

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Topics: natural gas, CRUDE, Saudi Oil Minister, EIA Inventories

Saudi's to Stay the Course Despite New Leadership

Posted by Kelly Burke on Jan 23, 2015 3:20:30 PM

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Quick note on the news this week - King Abdullah of Saudi Arabia died yesterday, temporarily rattling the markets. 

We discussed before that the Saudi stance on keeping OPEC hitting its production targets was a major factor in the continuing downward trends in the markets. Brent Crude shot up temporarily on the news - up about 2%,  but came off highs as the day progressed. 

The new ruler, King Saldman stated there would be no change to what he called the "correct policies" on oil the country has stood by even in the face of the 60% drop in prices. Additionally, the oil minister under Abdullah will keep his position in the new regime, which further implies that Saudi Arabia will stay the current course, and served to calm traders back down as the trading day wore on. 

On this side of the pond, today we saw ULSD close out +.0088 to 1.6467, and RBOB closed up .0053 to 1.3479. 

 

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Topics: OPEC, Saudi Oil Minister

The Swiss Rock Stocks, NYMEX Goes Along for the Ride

Posted by Kelly Burke on Jan 15, 2015 3:41:54 PM

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So a quick rundown on what's been happening in the markets this week:

Inventories

The inventory report from the EIA for this past week pegged Crude up 5.4mmb, to its highest level for this time of year in over 80 years. 

Gasoline inventories were up 3.2mmb, staying in the higher levels of the 5 year average for this time of year, and distillates were up 2.9mmb but remain in the lower half of the 5 year average range.

Markets

The stock markets across the globe went crazy today after the Swiss pulled a surprise move and removed the cap on the swiss franc (the cap keeps the franc artificially low versus other currencies), sending the Euro markets into chaos.Back here at home, dissapointing financial sector numbers pulled stocks down as well. The S&P dragged down with energy players and Best Buys' 10.9%  tumble.

The markets closed down across the board in the US,for the fifth day in a row.

The NYMEX closed down in tandem. Weak global financial data, plus the disappointing domestic bank earnings reports pushed oil down right along with stocks on a renewed concern about global demand levels in the face of oversupply.

Yesterday gas closed up over 8 cents, but today's drop erased a little over 5 cents of the gain. ULSD closed down a little over 3 cents to settle out at 1.6233, more than erasing Wednesdays gain of .0222.

Crude closed out at 46.23 (-2.23) a drop of a little over 4%. 

 

Politics

Yet another Keystone Pipeline bill has gone through Congress, and early this week it passed the procedural hurdles required to get it onto the Senate floor. Debate is expected to continue through the week, with a potential vote on Friday. 

The court case in Nebraska disputing the route of the pipeline has been settled, in theory removing the last remaining obstacle to the project moving forward.

President Obama has vowed to veto the bill, and it doesnt appear at the moment that the legislature has the votes to overturn the veto, so we shall see what happens there. 

 

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Topics: Keystone XL, CRUDE, EIA Inventories

Commodity Slide Continues Into 2015

Posted by Kelly Burke on Jan 8, 2015 11:32:11 AM

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2015 is off to a wild start, with Crude dancing around and then dropping below $50/bbl. Wednesday (the 7th) Crude closed out at $48.65, yet another 5 year record. Gasoline and distillates have closed down every day this week, so it looks like the 2014 slide has no intention of stopping.

The inventories published this week showed:

  • Crude: 3.1 mmbbls draw
  • Distillate: 11.2 mmbbls build
  • Gasoline: 8.2 mmbbls build

Weakened demand pushed up distillate and gasoline inventories, as did a drop in import levels so we saw a build despite a concurrent drop in production. 

Interestingly, Bloomberg is reporting today that the U.S. exported a record amount of Crude oil in November of 2014 - the highest amount exported in fact, since record keeping began in the 1920s. This puts the U.S. into the 17th largest exporter spot. (You can read the full Bloomberg story here: "U.S. Oil Exports Jump to Record as Shale Production Booms )

Continuing builds and a ramp up in exports may be the future for domestic production, and long term this could in theory keep prices stable at a lower level. However, a lot depends on how the economy rebounds (or doesnt) both here and globally. Without a ramp up in demand, continued excessive production will continue to drive prices down but without tangible economic returns. 

Last week the stock market got crushed on dropping oil prices, but it closed up sharply Wednesday, and today all 3 major indexes are in strongly positive territory. 

At writing, FEB ULSD is trending up .0154, and RBOB is essentially flat, up .0005, with Crude trending up .22

Outer months August and beyond are all trading in the red for all products at the moment, though. 

We should see this week if the ups and downs get tighter than they have been (ie swinging a penny versus 6) if we start to settle into a new benchmark low, or if the slide keeps going strong. 

 

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Topics: Commodities, US Crude Exports, EIA Inventories, stock market, shale

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

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

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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 Keeps Sliding on Dollar, Iraq, Margin Rates, and The Fed

Posted by Kelly Burke on Dec 4, 2014 3:54:48 PM

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Oil prices kept sliding this week on positive signs, despite a draw in US Crude supplies. 

Tuesday dropped on news of Iraqis striking an export deal with the Kurds that will resume the flow of oil from Kirkuk that had essentially been stalled out previously. Brent responded to the news by almost completely reversing its 3% gain on Monday and settling down $2 to $70.54. WTI, which was up 4% on Monday also dropped a little over $2 to close out at $66.88.

Besdies the Iraqi deal, factors in play in the selloff were also that the CME Group raised initial margins on crude oil futures by almost 16% which probably spurred sell offs, and the dollar also hit a 4 year high, which continued to push commodities down across the board. 

On the NYMEX Tuesday both products tanked,  ULSD ended up at 2.1544 (-.0580) and gas closed at 1.8116 (-.0694). 

EIA Inventories out Wednesday saw draws on Crude (-3.5MMbbls) with builds in distillates and gasoline. NYMEX still closed down, although far more moderately than Tuesday's drop off, with ULSD settling out at 2.1334 (-.0210) and Gas settling out at 1.807 (-.0046). 

The Fed's "beige book" notes came out Wednesday as well and were generally positive on the economy as a whole  and referenced the growth potential from lower energy prices, especially from consumer spending.

There is also some positivity in the shale situation, despite the falling prices from oversupply, analysts are still predicting a minimum increase in production for 2015 of 500,000bpd, in addition to production from new Gulf projects set to come online in the near future. 

Today the trends continued, with Crude landing at 66.81 (-.57), ULSD settling out at 2.1177 (-.0159) and gas at 1.7948 (-0114), possibly on the belief that we're going to see a positive jobs report tommorow. Will be interesting to see how the market reacts to its release. (When was the last time anyone guessed the jobs report numbers correctly, anyway?)

Stay tuned!

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Topics: CRUDE, NYMEX, FED rates, EIA Inventories, Iraq

Commodities Rally after Record Drops, up 3% on Crude

Posted by Kelly Burke on Dec 1, 2014 2:57:56 PM

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After the mulityear lows hit last week, oil started to rally today.

We're still lower than prior to the OPEC production announcement, but today saw ULSD up +.0512 to 2.2124 at the close, and Gas rallied up +.0534 to 1.881 at the close. WTI Crude closed up 2.99 to 69.00/bbl

Analysts are hopeful for an equilbrium price level between $70 and $75 so we're at least much more comfortably close to maintainence levels than we were on Friday. However, even at $70, shale production isnt terribly profitable, so on that side it wouldnt be the greatest benchmark. However, on the consumer level $60 sounds better than $70/bbl when you fill up your car. 

(And yes, the analysts are hoping for $70 while panicking about $40. C'est la vie, right?)

So why did we go up? 

The dollar weakened some, which almost always gives commodities a little bump. 

Most likely though, its just a pull back from an overreaction in selling off on Friday. 

Time will tell. The next few market days should be interesting to watch, especially with the inventory numbers out Wednesday. 

Stay Tuned!

 

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Topics: Commodities, Dollar falls, OPEC, WTI Crude, ulsd

    Energy Market Updates

    The information contained in this report has been taken from trade and statistical services and sources believed to be reliable. Dennis K. Burke, Inc. makes no representations or warranties with respect to the content of such news, including, without limitation, its accuracy and completeness. This bulletin is provided for informational purposes only, and is not intended as a recommendation to buy or sell commodities.

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