Monday August 29, 2016
The oil market ended a relatively uneventful week uneventfully. That even though Fed Chairperson Janet Yellen's speech in Jackson Hole, Wyoming suggested interest rate hikes are very much on the horizon in the United States. Using the term "full employment", Ms. Yellen's remarks have led most financial gurus to believe the Fed may raise rates by the end of the year (for the first time in a year). Such action would make the dollar much more valuable and, in turn, cause a negative price reaction from commodities. Her remarks began at 1000am EST on Friday, and there was a two minute window early in her speech where oil moved up and down by over dollar each. Despite that significant flurry, this particular summer Friday's price action remained uneventful.
On the horizon, however, oil watchers are still casting an eye towards the tropics and a few different storm systems. A large storm in the Gulf of Mexico would threaten supply, whereas a large storm moving up the East Coast would threaten demand.
October WTI posted a 31-cent gain on Friday (settling at $47.64), though the contract was down a dollar for the week. That figure remains relatively close to the recent market highs, but recent gains remain tenuous if interest rates and dollar moves become the main price driver for oil.
RBOB (flat) and Heating Oil (down a penny) also did nothing on Friday or for that matter, really, for the week. Cash markets (i.e. regional rack prices) are most in focus now, rather than NYMEX moves, because of the upcoming gasoline RVP-switch (summer grade to fall / winter grade) and the associated over / (under) supply with that transition.
Published by PAPCO, Inc. (PAPCO)
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