Wednesday August 17, 2016
Oil prices moved higher for fourth consecutive day on Tuesday, overcoming a sluggish start to post the highest closing market in over a month. Momentum buying (or, perhaps, short covering) has been the rallying cry of late, as September WTI has gained roughly five dollars from this time a week ago. The market will look towards the Wednesday morning Department of Energy (DOE) report to its next indicator. In addition, the September WTI contract expires on Thursday, and trading focus will soon shift to the October contract.
WTI began the day rather quietly, which is to say near unchanged, after some somewhat disappointing economic news (weaker than expected July housing data). That negativity only seemed to delay the (lately) inevitable push higher, and by late morning the market was in full bull mode on the day. September WTI was trading above $46 virtually all afternoon, a decent gain on the day and approaching the next strong technical resistance level of $46.80. At the close on Tuesday, September WTI had gained eighty-four cents to settle at $46.58 (highest since July 12).
RBOB and Heating Oil each posted solid gains (two cents for gas, one penny for heat). Despite the gains yesterday, the RBOB structure continues to narrow (less backward); summer grade gas, which is naturally more expensive than the winter grade gas, has seen that premium dissipate in recent weeks, as the Northeast (NYMEX delivery point) is extremely full of gas (as summer comes to a close). The September to October NYMEX RBOB spread is now roughly six cents, down from ten cents to start the month and fifteen cents at the start of the summer. Gulf Coast cash gasoline differentials firmed a bit on Tuesday, as new news on refinery problems in PADD III (Gulf Coast) begun to appear. Refineries in Baytown (TX), Port Arthur (TX) and Baton Rouge (LA) have all suffered glitches in the last twenty-four hours (flooding in Louisiana has contributed to those problems).
Written & Published by: PAPCO Supply & Trading
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