Wednesday July 20, 2016
Energy markets were relatively quiet on Tuesday, as participants waited on this week’s inventory statistics for a sense of price direction. The move lower was again lead by the RBOB contract, which now trades at a discount (again) to the ULSD contract. As we have stated in the past, it is unusual for RBOB to be below ULSD this time of year. For those brave of heart, there has been plenty of volatility in this spread over these past couple of months (see chart).
Yesterday, the U.S. dollar broke above recent resistance levels and ran to its highest outright level since March 10th. Despite this strength in the dollar, its effect on the energy complex was muted. However, any continued strength in this currency will exert downward pressure on oil and refined products.
Late in the afternoon on Tuesday, the API released its weekly inventory report. While the past several weeks have seen the release of the information change price action late, yesterday’s numbers were relatively in line with expectations and did not spur much of reaction. The highlights were crude oil stocks down 2.3 million barrels, and 805,000 barrels build in gasoline. Also, it is worth noting that we have seen variations between the API and DOE reports in several of the recent weeks, so Wednesday DOE report will be key for price action.
Published by PAPCO, Inc. (PAPCO)
PAPCO Newsletter Disclaimer. The information that is published in this newsletter, including the market reports, is derived from trade, statistical, and other sources that we believe are reliable and accurate. However, PAPCO does not guarantee the completeness, accuracy, or reliability of such information, and information should not be relied upon as such. Additionally, PAPCO assumes no responsibility for the material contained in the newsletter and the views expressed therein. Further, PAPCO expressly disclaims any express or implied warranties or guarantees with regard to such information. The information contained in this newsletter and any views expressed herein are provided for your informational purposes only and should not be interpreted in any way as an offer, invitation to make an offer, inducement, or recommendation to buy or sell options contracts, commodity futures, products, or any other type of security.