Energy Market Updates

NYMEX See-Saws on Inventories and Profit Taking

Posted by Kelly Burke on May 22, 2015 12:43:10 PM

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We enjoyed a little easing on NYMEX pricing for the beginning of this week, with a Goldmann Sachs prediction that oil prices could drop to $45/bbl. Additionally, it was reported that Saudi production for March hit 10.3mmb/day, a new record for them, which kept the market bearish.

That is, until the domestic inventory speculation talk started.

The API report for last weeks inventories predicted a 5.2mmb drop on Crude, and a 1.2mmb drop in gasoline supplies, and that, combined with the actual EIA reported draws pushed up the market. 

Wednesdays EIA report showed actual drops of 2.67mmb on Crude, and a 2.8mmb drop on gasoline. Consequently, as we saw, the market jumped up.

Crude and ULSD backed off Wednesday's intraday highs with ULSD closing up .0168 to 1.946, but RBOB settled out up .0461 to 2.0411. Yesterday the trend continued, with ULSD jumping up .0399 and RBOB closing up .0413 to 2.0824. 

Today the NYMEX has backed off, by noon ULSD was trending down -.0354, with RBOB following suit at -.0396 on profit taking from the weeks earlier gains. 

A bright spot for Memorial Day Weekend - retail gas prices are at their lowest in 6 years. Have a great long weekend, everyone!

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Topics: Goldman Sachs, EIA Inventories, retail gasoline

NYMEX, WTI Jump on Shale Slow Down & Inventory Concerns

Posted by Kelly Burke on May 12, 2015 7:11:00 PM

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The NYMEX shot up again today, after trending slightly downward the past several sessions. Last week saw Brent over $65/bbl and today WTI settled out +1.50 to 60.75, over the $60/bbl benchmark we've all been watching for.

ULSD closed up +.0535 to 1.9989, while RBOB shot up over the $2 line again with a gain of +.0529 to settle at 2.0393. 

Our friends at OPEC came out earlier this week to announce they saw no increase in oil prices on the horizon, given they see no decrease in production, and denied reports that there was consideration of reinstituting production quotas to boost prices. This pumped the brakes on the rally temporarily, and resulted in a pummeling of energy stocks in the S&P in the process - most notably Exxon and Chevron shares (Both companies saw gains today, however, on the price reversal).

So what happened today?

Most analysts are crediting a weaker dollar in combination with the monthly drilling report that indicates some slow down in shale production domestically. The EIA projected that output from major shale plays will drop by some 86K bpd in June.

Analysts also expect to see draws in crude on tommorows EIA inventories report, which is almost always good for a few cents worth of upward pressure on the market - at least if they are correct, that is.

Outside of drilling and supply concerns, we once again saw resumed airstrikes in Yemen on the same day a cease-fire was to be discussed.

Deja vu, anyone?

Stay tuned!

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Topics: Bull Market, RBOB, WTI Crude, stock market, ulsd, yemen

NYMEX Spikes on Escalation in Yemen

Posted by Kelly Burke on Apr 23, 2015 3:04:00 PM

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(Photo Credit: Dmitry Chulov / Shutterstock.com)

Brent Crude jumped over a dollar at opening this morning, while on the NYMEX, gas and diesel were both up over 4 before 10am. By noon both products surged up well over 5 cents, and products across the board continued to surge upward throughout the day.

 At the close, ULSD settled out at 1.9239 (+.0531) and RBOB closed at 1.9956 (+.0711). WTI closed up 1.53 to 57.69.

So what's going on? 

The Saudi's resumed airstrikes on target cities in Yemen yesterday, one day after supposed peace talks. Saudi Arabia is again calling on the White House to propose a diplomatic solution to the conflict.

Long story short, the deal in Yemen is that Shiite Houthi rebels have overtaken the Presidential palace, and if they can successfully pull off a coup, there is a very real danger of serious supply disruptions.

About 4% of global oil supply passes through the Bab el-Mandeb strait, which is controlled by the central government in Yemen, according to the EIA.

Traders are closely watching the situation for any indication of a resolution or escalation because of the potential supply implications involved. 

Yemen also relies on exporting it's own oil resources, which have declined in volume significantly since 2001 as a result of internal fighting. Their economy relies on oil exports to the tune of 60% of their revenue give or take.

Essentially, not only would a rebel coup in Yemen spike oil prices on transport concerns, but would collapse the Yemeni economy and likely lead to repurcussions and fighting throughout the region. 

Stay tuned, and don't forget to fill your car up before the increase hits the pumps!

 

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Topics: NYMEX, saudi arabia, yemen

RBOB Heats Up on EIA Inventory Shortfall

Posted by Kelly Burke on Apr 22, 2015 2:53:16 PM

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Today's EIA Inventory report for the week ending April 17th showed a build of 5.5mmb on Crude, but a drop of 2.1mmb on gasoline. Interestingly, even though analysts had projected a mere 2.6mmb build in Crude while the actuals were more than double that, Crude ticked upwards along side RBOB and ULSD initially before settling back down.

Stocks were up across the board basically today as well, on positive economic signs - 71.9% of S&P companies who have reported earnings have reported earnings above analyst expectations. Additionally, housing sector reports indicate a jump in existing home sales of over 6% for March versus February, which is also an 18 month high - a good sign for the economy and also a factor in pushing todays stocks up. 

On the negative side, bombing resumed today in Yemen, precisely ONE day after peace talks, which may or may not impact the markets tommorow.

At the close, gas retreated from the intraday high of +.0424 to close out at 1.9245 (+.0364) and ULSD closed up +.0176 to 1.8708, with Crude closing off -0.45 to 56.16.

Stay tuned!

 

 

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Topics: EIA, RBOB, EIA Inventories, stock market, yemen

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

    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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