Tuesday May 10, 2016
Tuesday, Oil prices fell to their lowest level in two weeks on Monday, dipping on the strength of the dollar and on newly minted data reporting a recent increase in Iranian and Iraqi oil exports. The impact of the Canadian wildfires in still in play, of course, with varying reports of offline oil production and future production losses. The specter of such losses caused a mini-rally towards the end of last week, though the prompt contract could not push higher than $46. After failing, again, on Monday morning at this $46 level, WTI flailed and sputtered its way through the balance of the day. The dollar, whose weakness in the past month has helped support the oil price rally from the mid-$30s to where we are right now, firmed considerably yesterday and likely attracted the attention of investors. Still, even with the Monday dip, front month WTI remains in a range between $43 - $46, and has settled within that three dollar sphere every day for the past three weeks.
In overnight Sunday trading, June WTI was up nearly a dollar (approaching the $46 marker) on continued worries about the loss of oil out of Canada (and, ultimately, how those losses will impact the supply / demand balance later in this calendar year). Once we got to the unofficial market open, however, oil began its steady and methodical decline; there was little support to be found at $45, $44, etc as WTI found new daily lows as the day progressed. Finished products were weaker than WTI (RBOB and Heating Oil each posted five cent losses on the day, see below). The market finally found some stable footing near the market close, but only after June WTI had lost well over a dollar from Friday (and over two dollars from the overnight highs). June WTI settled on Monday at $43.44, down $1.22 on the day.
Refined products continued their May (to date) swoon. Including Monday’s nickel decline, June RBOB is now down sixteen cents this month, while June HO is (merely) down eleven cents. Though gasoline demand remains robust, inventory remains plentiful ahead of the peak driving season and European gasoline cargoes are heading to the U.S. East Coast in force (which is nothing new, mind you). May is often times a soft month for commodities, and the opening week this year is doing nothing to change that history.
Published by PAPCO, Inc. (PAPCO)
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