Breaking $50

Main Image
Daily Settlement Prices

Front month WTI settled above $50 for the first time in nearly eleven months on Tuesday, spurred by continued weakness in the U.S. dollar and by the start of some technical short covering. Without any new news of late (supply outages appear to be the norm, and the Federal Reserve seems content to stay away from interest rate hikes), the oil market seems to be left to its own (de) vices, and the momentum now is certainly on the side of the bulls. Aside from last Friday’s minor dip, oil prices have been flat to up virtually every day for the last few weeks.

After a fairly strong defense of $50, the technical bears may soon look to get out of the short game in fear of another multi-dollar price increase. Wednesday morning will see the release of the weekly Department of Energy (DOE) inventory report, which is expected to show a healthy draw in crude oil stocks.

July WTI was already above $50 by the time most of North America was moving on Tuesday, and it stayed that way for the entirety of the day. Though the front month contract did trade above $50 on two different occasions in the last few weeks, it had never recently settled above that figure until yesterday. Though there haven’t been any massive up days, there have been many, many smaller up days – gradual momentum. The Heating Oil contract has also provided some additional support, as it has been even strong than WTI of late (though RBOB has lagged). A bullish DOE report could auger a much larger price increase on Wednesday. July WTI settled at $50.36 (ironically, this is the same price as the last time front month WTI settled above $50).

Difficult to describe the relationship now between the NYMEX RBOB and Heating Oil contracts, as their outright performance of late has belied fundamentals. Including Tuesday’s changes (RBOB was flat, Heating Oil was up four cents), the RBOB / HO spread has narrowed by seven cents so far this calendar month and is now a mere four-and-a-half cents (for comparison, a year ago, the RBOB / HO spread was over fifteen cents). Even more peculiar in this recent product price action is that distillate stocks in PADD I (East Coast, home of the NYMEX delivery point) are significantly higher than historical norms, especially when compared to PADD I gasoline stocks. It is possible that there has been some reversal of some investment money in the RBOB / HO spread (that is, those who were long that spread have had to cover it and sell the RBOB).

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.



Post Comment

Commercial Price Risk Mgmt Lubricants Retail Home Heat About Us
Fuel Products
Fleet Card
Energy Markets
Manage Risk
Custom Solutions
6 Easy Steps
Pricing Tools
Weekly Updates
Inventory Mgmt
Branded Fuels
Unbranded Fuels
Custom Solutions
Site Development
C-Store support
Inventory Mgmt
Pricing & Incentives
Delivery Options
Service Programs
Price Protection
Service Areas
News & Events
Contact Us

Sign up for
Email Updates


4920 Southern Blvd
Virginia Beach, VA 23462

© Copyright 2019

Site Map
Privacy Statement
Terms & Conditions