Markets were relatively unchanged Wednesday as we continue to trade sideways. A result of upward pressure from OPEC cuts and fund lengths matching downward pressure over fears of domestic supply growth, front month WTI continues to trade in the very narrow $2 range ($52-$54). It has spent most of the last four trading sessions inside the one dollar range of $53-$54. Read more
This week's volatile price changes continued yesterday, as the market shook off an "on paper" bearish Department of Energy (DOE) inventory report to recoup a healthy portion of the losses seen in the past few days. February WTI had dropped by three dollars in the first two sessions this week, closing at its lowest level since mid-December and giving the "defenders of $50" bulls reason for pause. Read more
The oil market settled fractionally lower on Wednesday, and remains fraught with excitement / intensity / malaise (depending on your forward price view) on how the remaining weeks of the year will play out. Despite the rather non-committal settles on Wednesday, the market did see two major macro inputs during the day, each of which caused a significant price reaction (one up and one down).
Wednesday's price action continued to follow through from the strength seen over the past week. Markets started the day stronger, following Tuesday night's API report, which showed a 3.8 million bbl draw of crude oil. Although the products were mixed, distillate drew and gasoline built, the overall signal was bullish as the crude oil draw pulled the market higher overnight Tuesday and into Wednesday morning. Read more
The Department of Energy (DOE) inventory summary reported a fifth consecutive week of crude oil stocks draws, surprising the market and providing another bullish kick in oil's advance towards the $50 plateau. Though, ultimately, the November WTI did not cross that threshold during the day, it seems a question of only when, not if, that will happen (and, in fact, WTI did move above $50 around 8:30 this morning).
The DOE report showed large draws in both crude oil and distillate products, adding a spark to a market that didn't need much to continue its advance. All told, crude oil stocks have declined more than 25-million barrels in the last five weeks and are below 500-million barrels in total for the first time since January this year. Read more
In a day full of surprises, the oil market rocketed higher and posted significant gains in all of the major product categories. The biggest news (and surprise) of all was the formal pledge by OPEC to limit the cartel's oil production at 32.5 million barrels per day, a figure which is several hundred thousand barrels per day less than current production levels. While the rubber stamp will occur at OPEC's next, official meeting (scheduled for late November), and the production trimming won't happen for a few months, the fact that there was an agreement at all shocked most market participants. OPEC has not had any formally announced production cut since 2008, and output has been steadily rising over the past few years (to be fair, so has world demand and the "call" on, or need for, OPEC's oil). Read more
Colonial Pipeline announced Wednesday that limited volume of gasoline has begun to pump on "Line 2" (previously distillate-only pipeline). The company also said roughly 6,000 barrels of gasoline had leaked from "Line 1", though extraction and repairs to the pipeline have not yet begun (safety concerns). Pumping rates have slowed and delivery times have been adjusted (backwards) to reflect the issues in combining products into one main pipeline, and the lack of pressure (flow) that physically pushes the barrels north through the pipeline. Read more
Oil prices settled higher for the fourth consecutive day (and at the highest level in two weeks) after the Department of Energy (DOE) inventory summary showed a massive (but surely Hermine-impacted) crude oil stock draw. Oil stocks were reported to have fallen by over 14-million barrels, largely driven by a sharp dip in imports (down nearly two million barrels per day, week-on-week), though that is easily explainable by ships being held at sea and ports being closed in anticipation of last week’s storm. Read more
A bullish Department of Energy (DOE) inventory report was just another reason for the recent renaissance to continue, as oil prices again edged higher to post new, six-week highs. Oil has risen by seven dollars off of its "summer blahs" low, and with the Calendar 2017 WTI strip now above $50, there might be enough incentive for producers to begin hedging next year's production. Near term price action will again be dictated by macro news (OPEC) and by investment money flow (in this instance, short covering). The September WTI contract, which expires Monday and thus is winding down in trading action, is very near a strong resistance level ($46.80); if it breaks through that number, it might be a fairly quick run to $50. Read more