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An Unseasonable Fall in the Oil Complex

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Pressured by hard data confirming that OPEC increased production in October, oil prices slid again on Friday to reach new, two-month lows. As prices moved higher in the month of October, OPEC members were generally increasing their production levels. October's estimated production from the group was significantly higher than what the 'Call' on OPEC oil will be in Calendar Year 2017 (i.e. the "Call" is what experts estimate OPEC will have to produce to keep the world in balance).

Oil prices have fallen for three straight weeks, dropping more than seven dollars in the process. From a bull's perspective, the November 30 OPEC meeting can't get here soon enough, with those views looking for any price supportive headline. December WTI dipped by over a dollar on Friday to settle at $43.41.

Gasoline (RBOB futures and the cash markets) has been even weaker of late. The three-week losing straight has seen the NYMEX RBOB contracts fall by over 20-cents, on a combination of softer demand (post-summer driving season) and increasing supply (post-refinery maintenance).



The Gulf Coast gas cash market fell precipitously on Friday (a scheduling day for Colonial Pipeline). Differentials often fall towards the end of the calendar year as producers look to move barrels prior to year-end (tax implications). NYMEX Heating Oil (and cash diesel) remains the healthiest of the liquid petroleum complex, which is to say it is the least weak. A mild late Fall / early Winter is not helping in that regard.

 

PUBLISHED BY PAPCO, INC. (PAPCO)


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