Friday May 6, 2016
Oil prices ended the day on Thursday virtually unchanged from Wednesday, though settlement prices were well off the early highs of the day. In that regard, the strong morning and weak afternoon price action was very similar to what we saw on Wednesday (inventory report day).
The early price support came from supply fears, as the raging wildfires in Northeast Alberta have shut-in roughly 500,000 barrels per day of oil sands production. The fields themselves are not specifically at risk, but the personnel required to operate the fields have all evacuated the area. (Quite amazing that every resident of Fort McMurray has been accounted for after the evacuation).
After the morning surge, however, prices seemed to hit a technical ceiling (just above $46, the top of the past few price moves) and gradually sold off during the day. The back-to-back days of failing to hold early momentum does not auger well for short-term price action, and WTI seems likely to settle in the red for the week (which would end a five-week streak of higher Week-on-Week price gains).
June WTI was up nearly two dollars early in the day on yesterday, trading slightly above $46, which brought the market back to nearly flat for the price. The market reversal began in earnest soon thereafter, and prices sold off in step-wise fashion for the balance of the day (that is, a move lower, followed by a period of inactivity, followed by another move lower, etc). WTI closed at $44.32, up 54-cents on the day, though the day really just ran out of high-volume trading hours (else we might have had an even lower settle). The market has settled into a nifty little range of $43 - $46 this week.
The finished products were even more unchanged than WTI, with June RBOB gaining half a cent to close at $1.4914 / gallon and June Heating Oil advancing by five points ($1.3287 / gallon settle).
Gulf Coast gasoline was weak yesterday, despite the near-unchanged NYMEX, as pipeline scheduling day found many more sellers than buyers. The Thursday cash differential for Gulf Coast CBOB was its lowest in nearly three weeks.
Published by PAPCO, Inc. (PAPCO)
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