Tuesday July 5, 2016
As is typically the case before a three day U.S. holiday, market activity was light on Friday. Front month WTI failed to break above the 400,000 lot level, and volume on the products side was also light.
While futures were lower most of the morning, as the market focused on worry over future demand, the afternoon brought renewed buying that resulted in crude oil and products finishing higher on the day. Before long weekends, books are often squared up to avoid short exposure, in the event that a catastrophe takes place.
August WTI finished essentially at $49, on the higher side of the $45-$50 range. The ULSD-RBOB spread also narrowed Friday, and many will continue to watch this relationship to see if ULSD takes a premium to RBOB. Rare for this time of year, it did occur last week.
Although a quiet news day, Friday’s data was highlighted by the release of the Baker Hughes rig count. This data showed U.S. oil rigs up 11, a sizable increase as the long run has seen a large downtrend.
It will also be worth noting how the demand numbers released by the Department of Energy shape up over the next couple weeks. In particular how they are affected by the July 4th holiday, which was expected to be one of the largest travel days in recent history.
Published by PAPCO, Inc. (PAPCO)
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