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MarketWatch | Refined Products
Monday, November 10, 2014
Market Commentary
Recap: Oil markets moved higher Friday as a number of factors, including increased heating demand in the Northeast (the largest U.S. heating oil market) began ramping up for the first sustained period for the 2014‐2015 season. NYMEX ULSD (HO ‐ heating oil) futures climbed up 4.08 cents, settling at $2.4995. NYMEX ULSD managed to stay under $2.50, perhaps stemming losses of those speculators who have been at record net‐short positions for months. Of particular interest, the NYMEX ULSD December to March backwardation, or premium for December, has increased to 3.42 cents, suggesting that market participants are taking notice of supply tightness as New York Harbor spot prices ran higher on Friday. NYMEX RBOB (Gasoline) futures settled up less than ULSD, 51 points to $2.1352, but spot gasoline prices in New York Harbor went higher as basis was up over 5 cents. As a percentage, crude oil increased less than products as reports that the new 450,000 bpd Seaway Twin pipeline, which will pump oil from Illinois to the Gulf Coast, will have a delayed opening due to operational issues at the Enterprise Crude Oil Houston (ECHO) terminal. This news had physical traders seeking crude oil storage space in Cushing, OK. An increase of physical crude barrels in Cushing would be considered bearish to NYMEX Crude (WTI) prices, perhaps keeping WTI crude gains muted. NYMEX Crude settled up 74 cents to $78.65, and ICE Brent settled up 53 cents to $83.39. Currently, oil markets are up across the board on the triple whammy of bullish information to start the week: cold weather across the country, tensions building in Ukraine since Friday, and reports of oil field closures in Libya. NYMEX ULSD is up 4.17 cents to $2.5412, NYMEX RBOB up 2.77 cents to $2.1629, NYMEX Crude up 78 cents to $79.43, and ICE Brent up $1.40 to $84.79.
Other factors that started supporting oil prices on Friday included jobs data falling short of expectations and reversing the dollar's strength, reports that Russia was crossing back into Ukraine with "... 32 tanks and truckloads of troops ..." (Reuters 11‐7‐
14), and Reuters reporting that "The U.S. military has drawn up plans to significantly increase the number of American forces in Iraq, which now total around 1,400, as Washington seeks to bolster Iraqi forces battling the Islamic State, U.S. officials told Reuters on Friday. The officials, speaking on condition of anonymity, declined to offer details. The United States aims to help advise and train Iraqi and Kurdish forces battling Islamic State fighters who swept into much of northern Iraq." (Reuters 11‐7‐14)
Speculator "Spec" Watch: Net speculative length decreased slightly for both NYMEX (WTI) and NYMEX RBOB (Gasoline), and the net‐short position for NYMEX ULSD (HO) got smaller! According to the CFTC's Commitments of Traders Report released on Friday for reporting through Tuesday, November 4, 2014, the Money Manager (Speculative) category for NYMEX (WTI) Crude, net speculative length (combined futures and options contracts) decreased 8% from the previous week of 182,486 down to 167,906 futures and options contracts. NYMEX RBOB net speculative length declined 1.6% from 31,086 futures and options contracts to 30,587. NYMEX ULSD (HO) speculators decreased their net‐short position 14% to ‐30,737 fewer futures and options contracts from the previous week at ‐35,704 contracts. (Negative representing net‐short position.) It appears as if NYMEX ULSD speculators are taking notice of the colder temperatures, with a reduction in their short position; however, they are still net short, and as prices climb, they lose money.
All NYMEX | Prior Settlements
Month
Close
$2.4995
December to $2.4893
January $2.4776
backwardation: $2.4653
1.02 cents
$2.4532
$2.4494
December to $2.4528
March $2.4620
backwardation
$2.4712
increased to 3.42 $2.4814
cents
$2.4915
$2.5000
$2.5059
$2.5111
$2.5086
$2.4992
Sprague HeatCurve Oct 2015-April 2016*
Change
$0.0408
$0.0390
$0.0350
$0.0329
$0.0314
$0.0298
$0.0286
$0.0274
$0.0260
$0.0247
$0.0233
$0.0221
$0.0212
$0.0203
$0.0199
$0.0197
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
2.5031
* Degree Day weighted NYMEX strip (no differentials)
Other Front Month NYMEX
Crude - WTI
(December)
Crude - Brent (December)
Natural Gas
(December)
Gasoline
(December)
$
$
$
$
Close
78.65
83.39
4.4120
2.1352
Change
$0.74
$0.53
$0.0080
$0.0051
Inventory Highlights
31-Oct
Crude oil
Gasoline
Distillates
PADD 1
New Eng (1A)
Ref Runs %
2014
380.2
201.8
119.7
41.48
7.22
88.4
Wk Chng
0.5
-1.4
-0.7
0.19
0.59
1.8
2013
385.4
210.0
117.8
39.10
7.00
86.8
Y/Y % Chg
-1.3%
-3.9%
1.6%
6.1%
3.1%
1.8%
ICE Brent Crude and NYMEX ULSD (HO) charts
$130.00
$125.00
$120.00
$115.00
$110.00
$105.00
$100.00
$95.00
$90.00
$85.00
$80.00
ICE BRENT CRUDE [Continuation]
Brent finished up 53 cents Friday on reports Friday that Russia was crossing back into Ukraine.
Recap: Oil $3.40
$3.30
$3.20
$3.10
$3.00
$2.90
$2.80
$2.70
$2.60
$2.50
$2.40
$2.30
$2.20
NYMEX ULSD (HO) [Continuation]
Colder temperature forecasts helped propel NYMEX ULSD higher on Friday, settling up 4.08 cents to $2.4995. $2.50 mark is being tested.....
This market update is provided for information purposes only and is not intended as advice on any transaction nor is it a solicitation to buy or sell commodities. Sprague makes no representations or warranties with respect to the contents of such news, including, without limitation, its accuracy and completeness, and Sprague shall not be responsible for the consequence or reliance upon any opinions, statements, projections and analyses presented herein or for any omission or error in fact.