The recent upward oil market took a slight breather on Friday, as the market eased off the gas pedal following a week long run that saw the front month WTI contract gain over six dollars per barrel. Thursday saw WTI settle over $50 for the first time in over two months, and although the market dipped back below that on Friday, the trend certainly continues to point towards the upside. Aside from the bullish overtones from last week's OPEC meeting, the oil market is also being supported by an extremely strong diesel market (NYMEX Heating Oil), as fall harvest season is in full swing (upping distillate demand).
The Calendar 2017 WTI / Brent strips are now well into the $50 range, which should entice oil producers to increase hedging programs (i.e. selling forward). For now, though, the possibility of producing front selling seems to be the only item which could slow down the relentless price push higher.
Trading activity was subdued on Friday, with WTI staying in a dollar range for most of the day. This price action was similar to that on Thursday, with the only difference that the market closed slightly lower, rather than higher, on Friday.
November WTI gained nearly two dollars last week (on top of nearly four dollars the week before), while the November HO contract was up a nickel (and fifteen cents in two weeks).
Hurricane Matthew probably caused some product supply disruptions last week, though demand might actually show a week-on-week gain because business and individuals in the South topped off tanks in preparation for the storm. Still, the weather probably has had very little to do with the recent price events.
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