Wednesday September 7, 2016
Oil prices closed moderately higher on Tuesday, dismissing Monday's electronic trading volatility, but remain poised to bounce after declining towards the tail end of August. The Monday's headline grabbing news about a tacit agreement between Russia and Saudi Arabia on future oil production sent the market into a bullish tizzy, though that price surge proved very temporary. As most of the U.S. returned to their desks on Tuesday, prices were back to unchanged from Friday and didn't deviate much from that during the day.
WTI dipped by nearly five dollars in the second half of August, as the bullish euphoria about the late September "special" OPEC meeting faded and looming refinery maintenance (read: lower demand) softened market outlook. The new, refreshed macro news, coupled with the year's first large storm (and the worries that accompany such weather) has helped WTI find a floor in the past few days. For now, October WTI seems content to chop around the $45 mark, as the last few days of settles have seen little change from that number. On Tuesday, October WTI settled at $44.83, up 39-cents.
Tuesday was the last scheduling day on the Colonial Pipeline for summer grade gasoline, and the lack of buyers for this soon-to-be-outdated product was evident. CBOB cash differentials fell by four cents. Southeast markets have already begun to price in the transitionary (Fall) grade gasoline on the way to winter grade gas in the coming weeks. Now that the summer grade gas is but a memory, cash markets should stabilize, though rack discounts may remain in place for a bit. Hurricane Hermine probably depressed demand for a few days in the South but did not damage any oil infrastructure (production or refining).