De-Escalation Walks Back Overnight Oil Gains

Posted by Kelly Burke on Jan 8, 2020 2:57:30 PM

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What a wild start to 2020 for the oil markets! 

Friday saw morning trading jump ~4% on the Pentagon's confirmation that the United States had launched airstrikes and taken out Iran's top commander in Iraq. Prices gave back about half their gains during trading on Friday with the settle at $63.05/bbl Crude, $2.0614 ULSD & $1.7488 RBOB. 

Gains continued to slowly pare off through trading Monday & Tuesday, for the most part.

That is until Tuesday night. 

After a few day's of relative quiet (outside of Twitter, anyway), last night Iran commenced retaliatory strikes against the US by launching missiles at two US Bases in Iraq housing military members, as well as towards the US consulate in Ebril (the consulate was not hit). There were no casualties in the strikes. 

Upon news of the missile strikes, the market shot up almost 5% on overnight trading. 

Despite the overnights being up so sharply, by today's open when it was clear there were not massive US casualties (which would all but guarantee further action), the market was essentially flat and plummeted through the day as news updates became available.

Today's round of press conferences and news briefs indicated strongly that Iran was signaling that they would not retaliate further, and as of the moment the US position is apparently to de-escalate by working on sanction proposals versus further military strikes. Of course, both of these positions are subject to change at a moments notice, and it's entirely possible sanctions are interpreted by Iran as escalation, but for the moment we at least have some calm on the Iran/US tension front and hopefully that continues. 

At the close,Crude settled out below $60/bbl again, at $59.61, ULSD shed .0742 to close at $1.9582, and RBOB lost .0734 to settle at $1.6488. 

Stay Tuned! 

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Topics: Iran

2020 Starts with Surging on Iran Strikes

Posted by Kelly Burke on Jan 3, 2020 3:05:39 PM

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Today, the market surged up to 4% on intraday highs as the Pentagon confirmed that US Airstrikes in Bahgdad killed Iran's top commander, Qasem Soleimani. Soleimani was considered to be responsible for the attacks by Iran on the US Embassy earlier this week, and the strikes have been framed as a retaliation for those attacks, as well as a preemptive action to prevent alleged further attacks in the works on US targets in the region.

This afternoon, Iran's Supreme Leader Ayatollah Khamenei promised retaliation ("Severe Revenge"), and the US announced that 3500 additional troops would be deploying to the Middle East. 

Concerns are obviously mounting about the nature of Iranian retaliation for the strikes, with the major concerns being either an escalation to war between the US & Iran, or that we will see Iran begin to attack crucial infrastructure in the region again, like they allegedly did in Saudi Arabia this past September. 

It is important to remember however, that when last September's attack took 5.7mmb out of global supply instantaneously, and essentially halved Saudi Arabia's production capacity, the markets spiked, but had essentially returned to flat within a few trading days.

That is to say - it's anyone's guess whether we continue to climb or the market does a quick turnaround over the next week of trading.

We did back off intraday highs by the close, where ULSD was up +.0373 to 2.0614, RBOB was up +.0446 to 1.7488, and Crude settled at $63.05/bbl.

However, the story is still developing so it's hard to know what impact any late afternoon & weekend developments may or may not have on the the electronics as well as Monday's open. 

Stay Tuned! 

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Topics: Iran

NYMEX spikes in wake of Saudi Arabia attacks

Posted by Kelly Burke on Sep 16, 2019 3:41:35 PM

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Saturday, ten unmanned drones struck a major Saudi Aramco facility in Saudi Arabia, and immediately took 5.7 million barrels out of the global supply. The Abqaiq plant that was impacted is one of the world's largest processors. 

The Saudi government indicated that Iranian weapons were responsible but stopped short of blaming Iran for the attack, (although US Secretary of State Pompeo did NOT stop short and explicitly called Iran out in a series of tweets).

Yemeni Houthi rebels have taken credit for the strike, and threatened further escalation but it's unclear if they are, in fact, responsible.

Initial reports seem to indicate the attack did not come from Yemen, but Iran has denied any involvement. A lot of the long range implications of the attack will of course hinge on whether military escalation from other nations becomes probable, which directly depends on whether Iran, Yemeni rebels, or a third party was responsible. 

Markets reacted in a big way - Crude was up on the overnights, and Crude, ULSD & RBOB all surged within seconds of the open, and never came back down. 

At the close, ULSD was up a whopping +.2060 to $2.0838, RBOB +.1993 to $1.7524 and Crude $62.90 (+8.05 over Friday's settle) 

This is still a developing story - CNN has a great, continually updating article you can follow new developments on in real time here: Saudi Attacks Send Oil Prices Soaring 

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Topics: Iran, NYMEX, Saudi Arabia Attack

Today's Market = John Bolton Firing vs OPEC Cuts

Posted by Kelly Burke on Sep 10, 2019 3:22:00 PM

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This past Friday, ahead of the scheduled OPEC meeting this week, Saudi Arabia abruptly announced a new Energy Minister, Prince Adbulaziz. The move sparked momentary concern that this was a signal the Saudi's would be reversing course on the OPEC+ production cut agreement, but it appears they are actually doubling down.

The kingdom announced they would be adhering to and encouraging the production cuts going forward, and Russian officials announced that they fully anticipated continuing the current trajectory with the new leadership. 

This consensus initially let prices continue their several day climb, with WTI hitting a 6 week high momentarily ... BUT!

But this afternoon, the Trump Administration announced the firing of US National Security Advisor John Bolton.

Bolton was extremely vocal regarding his hardline stance against Iran, and his "resignation" may be a positive signal for future progress on peace talks with Iran, and in the near term, may be a good move to de-escalate the current situation, a lot of which has impacted the oil industry via threats to tankers & the threat to block the Strait of Hormuz. 

Prices have backed off intraday highs following the Bolton announcement. Essentially any hint of resolution with Iran, while positive, also renews concerns about Iranian supply flooding the market, and that is pushing down on pricing (despite the prematurity of any concern). 

Time will tell how the interplay between production cuts and lingering supply concerns levels out, particularly depending on inventory reporting (which we should see tomorrow) and domestic production.

For today, at the close, we ended essentially flat. ULSD +.0035 to $1.9312, RBOB +.0062 to $1.5908

Stay Tuned! 

 

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Topics: Iran, OPEC, russia, WTI Crude

Iran Seizes Tankers in Strait of Hormuz

Posted by Kelly Burke on Jul 19, 2019 3:28:18 PM

 

BREAKING - Iran's Republican Guard has reportedly captured 2 oil Tankers in the Strait of Hormuz this afternoon, one tanker being British and the other Liberian flagged.

News broke of the first  around 1:30pm EST, the second being just announced 3:15pm EST. 

So far the market is up but not sharply, but it's unclear that the impact of news of a second vessel has hit yet. The obvious fear with multiple seizures is that Iran plans to deliver on the perpetual threat of closing the Strait of Hormuz, although it is obviously entirely too soon to make any such prediction. 

CNN is live updating on the unfolding situation, you can follow those updates here:  CNN - Iran Seizes Tankers in Strait of Hormuz

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Topics: Iran, Straits of Hormuz

EIA Data, Refinery Closures & International Tensions Spike NYMEX

Posted by Kelly Burke on Jun 26, 2019 3:07:45 PM

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The NYMEX is up big this afternoon in the wake of surprise draws in inventories, ongoing international issues, and the potential closure of the largest gasoline refinery on the East Coast. 

Inventories: Crude was projected to drop ~2.5mmb but EIA data showed a surprise drop of a whopping 12.79mmb for the week ending June 21.

Gasoline & Distillates were both expected to show builds, but gasoline drew down 1 mmb, and distillates dropped 2.44mmb (projections were for builds of 0.29mmb & 0.52mmb, respectively).

Crude jumped over 3% on the news, and refined products shot up as well. Gas has been up over 8 cents most of the day, with diesel up .04-.05. 

At the close, Crude settled at $59.38, ULSD jumped .0479 to $1.9713, and Gasoline was up .0932 to $1.9704

International Tensions The ongoing tension between the US & Iran continues to make markets nervous as we wait to see what the next steps may be after the abrupt calling off of air strikes last week in response to Iran shooting down an American drone. 

Continuing concern about the ongoing saga regarding US-China relations and the potential ramifications of proposed tarriffs on Chinese manufactured goods is also serving to keep markets on edge. 

The G20 Summit is slated for this week, and all eyes are on reported meetings to occur between Russian President Vladimir Putin and the Saudi Crown Prince. The previously scheduled OPEC meeting for the end of this month has been postponed, purportedly in order to allow for Russia & Saudi Arabia to discuss the so called OPEC+ deal on production caps, and what the ongoing supply curbs under that deal may look like at the summit. 

Refinery Closures  In addition to inventory draw downs, the Philadelphia Refinery that suffered an explosion last week when a vat of butane ignited is reportedly seeking to shut down permanently. The site is the largest gasoline refinery on the East Coast, and the long term supply impacts of it's shuttering could be substantial.

Stay Tuned!

 

  

 

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Topics: Iran, East Coast Refineries, Refinery Closures, EIA Inventories, china

Refinery Explosion & Iran/US Escalations Push Prices Up

Posted by Kelly Burke on Jun 21, 2019 11:40:37 AM

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Gasoline spiked this morning, after a refinery explosion shook Southern Philadelphia. At around 4am, a butane vat exploded at the East Coast's largest  refinery, causing large fires and prompting an shelter in place order for the surrounding areas. There are no injuries reported, and CNBC is reporting the flames were relatively controlled with the SIP order lifted around 7am. You can follow this story here: Massive explosion at biggest gas refinery in East Coast 

We won't know how long term an impact refinery issues will cause, but looming larger on the horizon is the US/Iran tensions hitting crisis point. The market has jumped substantially this week in response to the escalations.

In lieu of the deep dive really looking into the Iran/US issues would require, the following is a quick synopsis of what's been happening in the past weeks' escalations: 

Tensions have been simmering since last May, when Trump withdrew the United States from the so-called "Iran Nuclear Deal" reached with that country & President Obama that would have capped uranium enrichment for Iran at 3.67%.
  • Last week, as discussed, oil vessels were attacked in the Gulf of Oman.  The Trump Administration has placed the blame on Iran for the vessel attacks, although it is unconfirmed still at this moment in time. 
  • Monday, Iran announced that by the 27th, they would officially breach the caps on uranium enrichment set by the "Iran Nuclear Deal"  As mentioned, the Trump Admin withdrew from that deal in 2018, but it is important to remember that the other countries involved did not withdraw, the deal was supposedly still in effect between Iran & several other European nations.
  • In response to the announcement about uranium, President Trump announced he would be redirecting 1,000 troops to the Middle East.
  • Thursday, Iran shot down an unmanned US drone. Iran claimed the drone was within Iranian airspace, while the US argues their coordinates show the drone within International airspace near the Strait of Hormuz (there is about a 9 mile variance between the coordinates cited by Iran and those cited by the US)
  • Thursday night, President Trump ordered retaliatory strikes on Iran, but held off at the last minute. According to him, he called off the strike because the expected casualty rate would be higher than what he considered proportional to the attack by Tehran, so it is unclear whether a different type of retaliatory strikes will commence in the next several days. (This is still developing, follow live updates here: "Trump confirms he called off retaliatory strike against Iran in last minutes" 

We will continue to keep an eye on developing news and how it impacts the market.

If you have questions regarding current pricing, or want to learn about the options for fixed prices or prompts available in the face of volatility in the market, please don't hesitate to reach out. 

Stay tuned! 

 

 

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Topics: Iran, Iran Sanctions, Straits of Hormuz

Surprise Move by Iran on OPEC Deal Rallies CRUDE

Posted by Kelly Burke on Feb 17, 2016 4:46:25 PM

Middle Eastern Nations flags in a circle around an oil drilling rig

In a suprise move today, the oil minister of Iran stated that Iran would support the effort by OPEC and non-OPEC countries to stabilize the oil market and oil prices. The now-confirmed rumor that the Saudis and Russians were amenable to agreeing on a production ceiling has been circulating for a while, and served to briefly prop prices Tuesday - but the lack of a solid agreement, and the assumption that Iran would not cooperate had backed prices off their intraday highs. 

Today however, was another story entirely. After the Iranian minister announced the intent to cooperate, we saw WTI surge nearly 6% to once again close above the $30 dollar mark at $30.66 - quite a reversal in a short time when you consider that just last Thursday we saw WTI's lowest close since 2003 ($26.21/bbl)! 

ULSD and RBOB came along for the ride today as well, with ULSD jumping over 6 cents to $1.0879, and gasoline closed up over $1 again (barely) at $1.0034, a gain of over 3 cents on the day. Gasoline has been dancing around slightly under the $1 mark over the past week or so, with the exception of Friday's rally where it jumped over 10 cents to $1.0432.

It's difficult to determine if the nebulous "agreement to have an agreement" on the table with OPEC and other producers will sustain a longer term rally. Even if there is an agreement, it isn't clear just how much of a rally it will bolster long term, since the production ceiling sets production at January levels (read: unsustainably high for higher prices levels), it doesnt actually drop production.

That said, Iran not ramping up production will likely help matters in terms of at least mitigating some of what has been ever-increasing supply. Another concern though, should prices stabilize at higher levels - what impact does that have on rig counts and U.S. production? Although dropping rig counts have not proven to be the bullish signal they would normally be, a rising rig count could be a bearish symbol should the market stabilize around the $40/bbl mark, in my opinion, as it may signal the U.S. kicking over the first domino and restarting the game of chicken for "market share by means of over production" the major producing nations have been playing for the past year and a half.  

Time will tell. EIA numbers are not out until Friday this week because of the holiday - it will be interesting to see what impacts they have in the face of a possibly changing global supply picture. 

Stay tuned!

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Topics: Iran, CRUDE, OPEC, russia, wti

Crude Hits New Lows After Hopeful Bounce Overnight

Posted by Kelly Burke on Jan 19, 2016 3:35:02 PM

Downwards facing arrow constructed of the words oil and brent

Overnight and early trading on Crude was up - bolstered by the performance of the Chinese Markets (they went up instead of crashing hard enough to trigger the circuit breaker this time). US Stocks, bonds and equities all climbed along, and it looked like today was poised for a rally, or at least the proverbial "dead cat bounce"

However, once the temporary amnesia wore off, Iran coming back online came back into play and the markets took a beating across the board.

WTI Crude closed out at $28.46 - slightly below the $28.50 sub-$30 benchmark some analysts had projected (or more likely hoped) would be the new "bottom". That remains to be seen.

ULSD followed suit with WTI, dropping .0256 to settle at $0.9087, while gas was up 50 points to stay in the $1.02 range ($1.0262 to be precise).

Stocks unfortunately also followed suit with WTI  - as of writing  the Nasdaq, Dow Jones, and S&P are all down - keeping 2016 in the red as it has been thus far. 

The EIA inventories later this week could have a major impact, particularly if there are builds. Most predict draws, but a build on gas could be significant as we could in theory see RBOB follow ULSD below the $1 benchmark. 

Stay Tuned!

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Topics: Iran, Iran Sanctions, RBOB, WTI Crude, $1

Stocks & Oil Markets Take a Wild Ride Into 2016

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

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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!

 

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

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