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Rig Counts & Talk of Turkey Move the Oil Complex

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Daily Settlement Prices

Markets ended the week on a fairly muted tone. “Summer Friday” was in full effect as front month WTI trading was just over the 400,000 lot threshold, even after an unusual rise near the end of the day.

Most of the energy complex moved marginally higher on Friday, with the ULSD contract as the lone exception. With ULSD lagging on Friday, it helps widen its discount to RBOB, typical for this time of year. Although stronger on Friday, front month WTI still remains at the lower end of the much talked about $45-$50 range it has traded in for most of the month.

The energy complex’s upward move was somewhat tempered by the Baker Hughes rig count release on Friday. This data set showed oil rigs were up six. While one week of rig count is not necessarily significant, last week’s rig count puts the outright level at the highest in almost two and a half months, illustrating that domestic supply may have reached its bottom, and ample supply will continue to be produced (see chart).

071816 Baker Hughes Rig Count Graph

That said, just before the future’s market close (5pm EST), the energy complex saw a sizable rise. This is unusual for trading on Fridays, as most have wound down for the week. However, reports emerged of a potential coup in the country of Turkey. Turkey is a seen as a gateway to the flow of oil in the region, and a potential unstable region could bottleneck supply. The uprising was quickly quelled, however, with the president of Turkey assuring that all was secured and severe punishments would be handed down. While there was no long term effect on the market, it is evidence of how quickly and dramatically  global news can swing the oil complex.

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071816 Weekly Pricing Graph

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