A Surprising “Weak” Already?

Main Image
Daily Settlement Prices

050216 PricingThe old investor adage of “Sell in May, and Go Away” began in earnest on Monday, as oil prices posted their biggest single-day loss in nearly three weeks. The market was softer on Friday, and that weakness continued into the new week despite the dollar falling to its lowest level in a year. Prices moved consistently higher in April, on the backs of the weak dollar, lower domestic oil production and the anticipation of heightened demand in the coming weeks. All of those factors are still in play, mind you, despite the dips of the past two sessions, but there seems to be a sentiment that a slight correction could be in order.

June WTI began the new week (and month) quietly, trading around $46 and right in the middle of the large, psychological trading range of $40 – $50. Monday was a holiday in parts of Europe, so trading volume and news was limited. The market moved lower after the unofficial open, giving back about 75-cents in the first few hours of trading. The mid-day lulls kicked in, with limited moves after that, though a late selling spree did pull WTI down to its lows of the day at the settle. The dollar-plus drop in oil (June WTI settled at $44.78) was a bit surprising, given the weak dollar and rather strong moves in U.S. equity markets. However, as noted above, calendar May is often a very soft month for all paper products (equities, commodities, currencies). In fact, last year oil prices peaked in May / June before moving lower for the balance of the year.

The new, prompt June products contracts also settled lower, easing by three cents (Heating Oil) and four cents (RBOB), respectively. As strong as WTI was in April, the products were even stronger (both on the NYMEX and on the cash basis side), a boon to those refiners who had fully functional plants during the month. Last week, U.S. refiners were reported to have operated at 88% of total capacity, which is 2-3% below historical norms for this time of the year. This “dip” could help explain why gasoline and diesel performed so well last month, this despite burgeoning stock levels of these products in most areas of the country.

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