Tuesday September 6, 2016
Oil prices ended an otherwise dreary week on a high note, rising for the first time in five days after comments by Vladimir Putin indicating an eagerness by Russia to work with OPEC on limiting oil production. Those comments, following through on similar tones by Saudi Arabia last week, could auger a semi-formal agreement between many large oil producing nations (though, certainly, many market players are skeptical on the application and follow through of production cutbacks). The bullish fervor on Friday, which saw October gain over a dollar (settling at $44.44), carried through to Monday (in electronic trading, WTI was up two dollars early in the day), though that sentiment has cooled heading into Tuesday. Friday's gains were also supported by a weaker dollar; the monthly U.S. Job Report (published on the first Friday of every month) reported the economy added fewer than expected new jobs in August, which could further delay the Federal Reserve's appetite for raising interest rates.
After four straight down days to start the week, the market opened higher on Friday and never looked back. In addition to the bullish news mentioned above, there was probably some "storm unease" premium built into the rally, with market participants likely a little queasy to head home short going into a long, East Coast-storm affected weekend. October WTI reached its high point of the day late in trading action, and settled near its high point of the day. Still, even with the rally, WTI ended the week down over two dollars.
RBOB and Heating Oil posted three cent gains on Friday, though for the week the (now prompt) October contracts suffered double digit losses. Cash gasoline markets in the south moved even lower, as the transition to (cheaper) winter grade gasoline has begun in earnest. Though in-tank barrels through the South and Mid-Atlantic are still of the more expensive summer variety, the replacement barrel is much cheaper and rack markets are likely pricing as such. Fall refinery maintenance season will soon begin, which should help trim the remaining gasoline balance.
Written & Published by: PAPCO Supply & Trading
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