Thursday September 8, 2016
Prices traded in a quiet and range bound fashion on Wednesday, following the tone set on Tuesday, as prices appear to have bounced off of the late August low but are not in any hurry to threaten $50 (WTI). The front month (October) WTI contract traded in a dollar range, all round $45, and only the RBOB contract seemed to muster any strength in the market (October WTI settled at $45.50).
The Department of Energy (DOE) will publish its weekly inventory summary on Thursday morning (delayed one day this week due to the Monday Federal holiday), but don't be surprised if the data reports some skewed numbers. Last week's storm (Hermine) did cause production shut-ins (Gulf of Mexico) and some demand destruction. As such, some volatile numbers and volatile trading could be in place today.
A day after collapsing on the weight of expiring summer grade gasoline, Gulf Coast cash differentials rebounded smartly despite the new quote / product being "weaker" than the summer grade product (that is, non-summer grade gas is easier and cheaper to make, and thus should price at a discount to the summer grade gas). However, Wednesday's cash rally proved that the Tuesday sell-off was overdone, or, at the minimum, already took into account the move to cheaper gas. It will be interesting to view gasoline demand figures over the next few weeks to see if post-Labor Day driving habits slow down.
Published by PAPCO, Inc. (PAPCO)
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