Friday July 1, 2016
Crude oil and refined products were noticeably weaker on Thursday, likely the result of profit taking on the heels of a two day run up. Going back to last Friday, we have seen saw high volatility. The August WTI contract came off its high of $50.45 last Friday, to a low of $45.83 on Monday, and fluctuating back and forth within the range. In the short run, it would appear that the August WTI contract is wanting to remain range bound between the $45-$50 level, with it settle right in the middle on Thursday. It is expected that Friday’s volume will be light, as many market participants are expected to be leaving early for the long holiday weekend.
Yesterday the Department of Energy released its weekly Natural Gas inventory report. This data set was highlighted by a lower than expected build of 37bcf, which was far from the expected build of 46bcf. As a result, natural gas futures were well bid yesterday, and price moved opposite from the rest of the energy market.
Thursday also saw significant move in the NYMEX HO structure. While the past several weeks have seen movement mostly in the front, Thursday saw the carry widen in the front and several months down the curve. As this carry pushes out, it incentives suppliers to store barrels, so long as the physical market does not exhibit steep backwardation (which is not the case at the moment).
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