Despite Friday Drops, Gains for the Week on NYMEX

Posted by Kelly Burke on Jan 15, 2021 4:42:27 PM

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Despite today's across the board drops on refined prices, (-.0262 UL & -.0255 RBOB) this week saw oil prices overall continue to tick upward. 

What's pushing prices up? A weaker dollar, and stronger confidence in economic rebound as the vaccine rollouts continue. At play as well is new agreement on supply curbs by Saudi Arabia in tandem with larger than expected draws in US inventory levels. 

Wednesday prices came close to hitting 1-year highs at the close, briefly going over in intraday trading for Brent Crude. So far, halfway through January, Crude prices are up ~9% or so as confidence builds in eventual recovery from the COVID induced shut downs and resulting dips in demand that we saw push WTI into negative territory about 10 months ago. 

In terms of the supply side, EIA reports indicated that US Crude inventories dropped a little over half a million barrels for the prior week, with gasoline dropping 1.1mmb & distillates dropping 2.3mmb - double what some analysts had projected. More broadly, Saudi Arabia has pledged to cut its output by 1mmb/day which will drop overall production levels, even though Russia will actually have allowance to produce slightly higher levels than before. Sort of an odd twist to the usual OPEC+ setup - you can read more about the specifics on the deal here in the New York Times: Saudi Arabia Will Cut Its Own Production, Allowing Russia's to Grow 

On the demand side of the equation, talks regarding further stimulus under the Biden Administration, as well as continued vaccine rollout seems to have traders (and everyone else) hopeful about eventual demand recovery as the economy hopefully strengthens and rebounds once immunity levels hit threshold. 

We did however see drops today to close the week out across the board. Front month ULSD & RBOB settled at 1.5929 & 1.5284 respectively, with Crude at 52.36/bbl. March numbers closed out with ULSD off .0263 to 1.5942, and gasoline dropped .0261 to 1.577. 

Who knows what happens next. Enjoy your weekend & stay tuned! 

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Topics: saudi arabia, covid-19, Biden Administration

Markets Soar on Vaccine News, Presidential Transition

Posted by Kelly Burke on Nov 24, 2020 3:22:10 PM

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Final answers to lingering questions shot markets up today - Oil markets hit an 8 month high and the stock market soared,  with the Dow breaking 30,000 for the first time. Airlines, Cruise Lines, and Energy stocks all pushed up on continuing positive news regarding a COVID-19 vaccination. 

In intraday trading, WTI surged over 4 % to $44.80 (the last time we saw the $45 benchmark hold was in March, prior to both the Saudi/Russian price war and the expanding of COVID into a full blown global pandemic. In other words, its been quite some time. Who can even remember life before lockdowns started?).

Since November 9 (first vaccine announcement) Crude has gained ~15% and Brent is in backwardation, another positive sign. 

ULSD & RBOB both traded up over .05+ the majority of the trading day. At the close, ULSD was up +.0490 to 1.3595 for December & +.0484 to 1.3642 for January. RBOB gained +.0542 for December to 1.2582, and +.0539 for January to 1.2510. Crude closed at $44.91/bbl - juuuuuuust under that $45 benchmark. 

Earlier in the month (November 9) we saw markets jump on the announcement by Pfizer that they had developed a 90% effective vaccine. AstraZeneca and Moderna have also announced success on their iterations of a vaccine, one of which has the potential to solve some of the logistical issues regarding cold storage transport posed by the initial vaccine. Obviously, a vaccine means markets are hopeful that we will see a transition back to "normal" sooner rather than later, and the rally in industries particularly hammered by lockdowns, including air travel and general transportation would seem to bear that out. 

The other factor pushing markets today is the official start of the transition of power to the Biden Administration. Given the legal challenges being raised by the Trump Administration regarding vote counts, there was substantial uncertainty around the transition, and if there's anything the market hates, its looming questions without answers. It seems that the clarity is boosting confidence.

Lest we get overly optimistic however, it's important to note that although vaccine news is good news - none of the vaccines announced have been approved for general use yet. We are also still in a surge of COVID cases right now and there is no timeline on when a large enough contingent of citizens will be vaccinated in order for restrictions to begin easing. Goldmann Sachs & JP Morgan have revised economic expectations due to surging, New York City has closed schools again, and even in Massachusetts we are seeing field hospitals being reopened to handle expected increases in cases. All of this to say while today was great for 401(k)s, it is probably premature to be overly optimistic about the next few weeks to months. 

Despite all the craziness of 2020, we're Thankful to be here still working for our customers. We hope you have an amazing and relaxing (social distant) Thanksgiving. Enjoy the long weekend! 

 

 

 

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Topics: NYMEX, stock market, Trump Administration, covid-19, Biden Administration

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