Category Archive: General News
7/08/2019 Update 07/08/2019
Today’s Market News • Iran exports: Iran’s Oil Minister Bijan Zanganeh stated that he was very hopeful of an improvement in the county’s crude exports despite the tightened sanctions imposed by the United States. Industry sources indicated that last month’s Iranian crude exports had dropped 300,000 barrels per day or less after Washington tightened sanctions on the country’s oil exports in May.
• Tankers being seized: Tensions were at a high level over the weekend as a UK-flagged super tanker was reportedly seized by Revolutionary Guards, however the early reports were dismissed, and the tanker has been deemed “safe and well”. Earlier on Friday, a Revolutionary Guard Commander had threatened to seize a British ship in retaliation for the capture of Iranian supertanker Grace 1 in Gibraltar.
• OPEC output loses ground: OPEC oil output sank to a new five-year low in June as a rise in Saudi production did not offset losses in Iran and Venezuela. The 14-member Organization of the Petroleum Exporting Countries was down 170,000bbls from May’s revised figure. • Market Opinion: The energy complex is mostly quiet to start out the new week after the long holiday weekend. RBOB is currently seeing the most activity at the moment off close to 1% to start out the session. Traders appear to be searching for some “fresh” news to trade on this morning with the overall concern of a global economic slowdown and possible drag on oil demand as a result weighing on the market.
7/05/2019 Update 07/08/2019
Today’s Market News • Philadelphia Energy Solutions (PES): After the June 21st fire and official shut down July 1st of the PES refinery, there has been a loss of gasoline supplies by approximately 160,000 b/d and 100,000 b/d of distillate supplies. In the first few days of July, around 18 tanker ships, totaling at least 5.6 million barrels of gasoline has been scheduled to set sail to the East Coast. Hopefully these cargos will help keep RBOB futures controlled.
• Jobless Claims/June Unemployment: In the week ending June 29, initial claims were 221,000, a decrease of 8,000 from the previous week’s level. The 4-week moving average was 222,250, an increase of 500 from the previous week’s average. Total nonfarm payroll employment was little changed at 3.7%, the U.S. Bureau of Labor Statistics reported today. Notable job gains occurred in professional and business services, in health care, and in transportation and warehousing.
• Energy Stocks: Of the draw of 1.085 m/b on crude, PADD 5 showed the biggest draw of 2 m/b as California refinery issues finally start to subside. On distillates, most of the build was seen in PADD 3 and, the gasoline stock draw, no surprise, was in PADD 1, east coast.
• Market Opinion: Oil markets are showing weakness this morning, equity markets are also opening slightly lower while the dollar was showing some slight strength to start the day. Poor global economic fears are affecting oil prices today after German manufacturing data showed a 2.2% drop. With that said, the European Central Bank may be forced to bring more monetary stimulus the help the economy.
7/03/2019 Update 07/08/2019
Today’s Market News • Venezuela: After a slow May, exporting around 875,000 bpd, they were able to ramp up shipments of oil and refined products to 1.1 million bpd in June. The largest destination, due to sanctions, was China where the two countries have an “oil for loan” deal where Venezuela borrows money from China and pays them back with oil. According to Reuters, the U.S. received zero oil from Venezuela in June.
• Economic Reports This Week: Today: EIA/DOE Energy Stocks 9:30am CST, Jobless Claims 7:30am CST Friday: June Unemployment, Export Sales 7:30am CST
• API Energy Stocks: The API Energy Stocks were released yesterday and showed a draw of 5 m/b on crude, a draw on distillates of 1.70 m/b and a draw on gasoline of 88,000 bbsl. The latest Reuters poll for DOE inventories to be released this morning is calling for a draw on crude stocks of 2.964 m/b, a draw on distillates of 997,000 bbls and a draw on gasoline of 2.167 m/b.
• Market Opinion: Market analysts will be on the watch today for a confirmation of the API’s report of a draw on oil stocks of 5 m/b. Also, watch for updates on Iran who is warning they will take the next step in enriching uranium this Sunday. Iran already breached the uranium stockpile limits set by the last administration’s nuclear deal. Iran’s President is trying to pressure Europe into a new deal now. Light holiday trading is expected, however that can sometimes cause a volatile trading range.
7/02/2019 Update 07/08/2019
Today’s Market News • Federal Reserve: Inflation remains low and the Fed reported they don’t see any sign it will rise soon. As for interest rates, expectations are there could be one cut in July and one in September. The May unemployment report pointed to the weakening of the manufacturing sector as a concern. The Fed will see the June jobs report at the end of the week and get an initial look at second-quarter growth to decide whether to cut rates. The next FOMC meeting is scheduled for July 30-31.
• Economic Reports This Week: Today: API Energy Stocks 3:30pm CST; Wednesday: EIA/DOE Energy Stocks 9:30am CST, Jobless Claims 7:30am CST Friday: June Unemployment, Export Sales 7:30am CST
• Energy Stocks: The latest analyst poll for the API Energy Stocks this afternoon have estimates of a draw on crude stocks of 2.484 m/b, a draw on distillates of 1.243 m/b and a draw on gasoline of 2.175 m/b. Analysts’ attention will likely be on the gasoline inventories in the next few weeks after the recent fire and shutdown of the Philadelphia Energy Solutions (PES) refinery.
• Market Opinion: Oil prices are slipping back this morning even as the news that OPEC and their allied producers have agreed to keep the current oil production cuts for another nine months, into March 2020. Signs of global economic slowdown, which may affect oil demand is overriding the oil production cut extension, at least for now. Saudi’s Falih said yesterday he is “growing more positive about the global economy” after the G20 meeting over the weekend.
7/01/2019 Update 07/08/2019
Today’s Market News • OPEC Meeting: The two-day meeting in Vienna with OPEC and its allies is underway, where early press releases indicate that Russia, Saudi Arabia and Iran may already unofficially agreed to extend supply cuts ahead of the meeting. Saudi Energy Minister Khalid al-Falih said the deal should be extended by nine months, keeping the current output cuts.
• Trade Discussion: President Trump and President Xi Jinping met over the weekend in Osaka, Japan, where a temporary cease-fire has been agreed upon to give negotiators another chance to build a permanent agreement overseeing the flow of goods and services between the two nations.
• Economic Reports This Week: Tuesday: API Energy Stocks 3:30pm CST; Wednesday: EIA/DOE Energy Stocks 9:30am CST, Jobless Claims 7:30am CST Friday: Unemployment, Export Sales, both 7:30am CST
• Market Opinion: Starting the new week, much of the market focus will be on the extension of oil production cuts to keep prices supported. OPEC is expected to keep the existing deal in place, but will discuss an even bigger reduction in oil production. Even though no surprises are expected to arise from the OPEC+ meeting, this morning oil has hit a 5 week high of $60.28. Heavy resistance is seen just above the $60 level for August crude. Gasoline prices are expected to stay strong with nearly 49 million Americans expected to travel this 4th of July holiday.
6/28/2019 Update 07/08/2019
Today’s Market News • Iran : Tehran is suggesting an exit from the current nuclear deal unless they can achieve a reprieve from the U.S. on sanctions which are suffocating crude sales. Yet, world powers are warning them to respect it’s terms. On reports that Iranian crude is going to China, U.S. Special Representative on Iran Brian Hook stated “we will sanction any illicit purchases of Iranian crude oil.” He also indicated that the measures in place would deprive Iran of $50 billion in oil revenues as European companies choose between doing business with the U.S. or Iran. • Alberta eases crude production curtailment: The government of Canada’s main oil producing province has set August’s crude production limits at 3.74 million barrels per day (bpd) compared to the 3.71 milllion bpd which was established in July. These mandatory curtailments were initiated at the beginning of 2019 to address the issue of pipeline congestion that had created record discounts on Canadian oil. The easing is due to the private sector’s efforts to improve crude-by-rail capacity. Curtailments are only expected to be in place through the end of 2019. • Russia’s G20 expectations : Russian Energy Minister Alexander Novak is hoping to gain some clarity on global economic growth and oil demand during the current meeting of G20 nations in Japan. Of particular interest, will be outcome of U.S.-China trade talks. This desire for clarity will aid OPEC+ (OPEC and non-OPEC states including Russia) as they meet next week and decide to extend or adjust the current production deal that ends on Sunday. • Market Opinion: The day is beginning mixed as WTI crude is showing slight positivity while RBOB gasoline is a little weaker and ULSD distillates are about a penny to the plus side. The market will pay plenty of attention to the on-going G20 summit as well as the OPEC+ gathering early next week. Today is likely to be subdued as information is gathered and next week has potential for some volatility with light holiday trading activity.
6-27-2019 Update 07/08/2019
Today’s Market News • U.S.-China and G20 summit : This meeting of world leaders will take place in Osaka, Japan with the key event being the expected Saturday discussions between President Trump and Chine President Xi. The hope is this gathering will aid in reviving stalled negotiations between the two countries. U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin are also meeting with Chinese Vice Premier Liu He ahead of the Trump-Xi gathering. The outcome of these talks will certainly be watched closely by the market. • U.S. crude exports achieve record: Yesterday’s Energy Information Administration (EIA) inventory report indicated that overall crude exports reached 3.8 million barrels per day (bpd) which eclipsed the old mark of 3.6 million bpd which was set in February. The overall crude inventories dropped 12.8 million bpd for the week ended June 21st which was much more than anticipated and the largest weekly decline since September 2016. • OPEC+ : The Organization of Petroleum Exporting Countries (OPEC) and allies including Russia will be in Vienna on July 1st-2nd as they review the deal that has been in place since Jan. 1st which has crude output curbed by 1.2 million bpd. This deal is done at the end of June and the expectation has been they will continue it at this level, however, there is now some indication the cuts could be increased. Algeria, for example, has put forth the idea of increasing the cuts another 600,000 bpd for the second half of 2019. • Market Opinion: The complex is red to begin the day after yesterday’s strong performance upward. Even though it is normally a period of inventory increases, ULSD distillates showed a 3rd consecutive week of draws (per EIA) yesterday and were up nearly a nickel. Today is beginning off by about a penny as it could test $1.95 support. Look for plenty of volatility in the upcoming few sessions as market digests news from G20 and OPEC+.
Thursday, June 27, 2019
6/26/219 Update 06/26/2019
Today’s Market News • PES seeking to permanently shut refinery: Last week’s massive fire caused tremendous damage to Philadelphia Energy Solutions (PES) refinery and initial thoughts were that the Girard Point section of the two section complex would be down for an extended period. Now, sources are indicating they are seeking to permanently shut the entire site which will significantly squeeze gas supplies in this densely populated area plus there will be a loss of hundreds of jobs as layoffs to 700 union workers are expected to begin as early as today. • American Petroleum Institute (API) inventories: Yesterday’s API inventory report showed a decline of 7.55 million barrels of crude which was more significant than the Reuters’ estimate of a 2.54 million barrel decrease. Gasoline also had a significant draw of 3.17 million barrels when a slight increase was anticipated and distillates minimal 160,000 barrel build was not as great as the more than 500,000 barrel increase which was expected. The market reacted to this data with solid gains during after hours trading. • U.S.-Iran : Yesterday, President Trump and Iran had a war of words with Tehran officials condemning the fresh U.S. sanctions on them as Trump suggested obliterating parts of Iran if it attacked “anything American”. Iran is also suggesting they are done negotiating but Trump has left the door open to speak “peaceably” in an effort to ease tensions. • Market Opinion: Today’s market, considering the PES closure and API inventory report, is beginning with plenty of strength. WTI crude’s significant draw reported by API has it up more than a $1 this morning and testing the 200 Day Moving Average (DMA). If this morning’s DOE info confirms this bullishness, the $59.05 level is likely to be broken.
6/25/2019 Update 06/25/2019
Today’s Market News • Saudi Arabia: Amin Nasser suggests “what’s happening in the Gulf is definitely a concern”. Nassir, the president and chief executive of the country’s state oil giant Saudi Aramco, also did indicate that it’s additional spare capacity will allow it to meet it’s customers’ needs. They currently are producing at around 10 million barrels per day (bpd) but do have maximum output capacity of 12 million bpd. • India’s fuel demand: Sanjiv Singh, the Indian Oil Corp. chairman, expects the country’s fuel demand growth to be in the 4-4.5% range for this year. Gasoline and jet fuel will lead the increases as they are set to rise by 7-8% on the year while diesel consumption may be up by as much as 3%. The plan to add smaller airports in an effort to improve domestic transport systems will be the key in driving the increases for jet fuel. • Russia has become largest crude supplier to China : In May, Russia became the largest crude oil supplier to China as they shipped about 1.50 million bpd. Through the first five months of 2019, they have averaged shipments of 1.48 million bpd which is an increase of 9.8% from that same timeframe from one year prior. By contrast, considering escalating trade tensions, China’s imports from the U.S. has fallen by about 80% and have averaged just above 65,000 bpd during this five month period. • Market Opinion: As the day begins with a lack of any real standout headlines, demand concerns have come to the forefront. Markets are beginning the day mixed with crude barely changed and RBOB gasoline showing positivity while ULSD distillates are negative by less than a half cent. RBOB gasoline was unable to hold on to yesterday’s early gains but does still have the PES refinery issues as support. Look for it to hold the 100 Day Moving Average (DMA) of $1.8379 to keep that support.
6/24/2019 Update 06/24/2019
Today’s Market News • China’s gas and diesel exports show considerable declines: In May, gas exports from here fell 42.4% compared to May 2018 and diesel shipments were off 37.8%. These declines are occurring even as bit of a fuel glut has developed in China with new refining facilities coming on line. In addition, the demand of gasoline has slowed and there has also been a decline of new car sales. • Update on PES refinery fire : The supply of gasoline from Philadelphia Energy Solutions (PES) oil refinery will be greatly hampered as the alkylation unit was completely destroyed during Friday’s massive fire. This destruction, coupled with other fire damage, could shut the 200,000 barrels per day (bpd) Girard Point section of the twosection complex for an extended period. It is being reported that it could take several years to rebuild the unit. Plus, the refiner has already been facing many financial challenges before the fire.
• U.S. oil rigs grow for first time in three weeks : On Friday, it was reported that U.S. oil rigs grew by 1 (to 789) which compares to 862 rigs during the same week one year prior. The rig count has been declining over the past 6 months as companies cut spending on new drilling. Even so, the U.S. crude output from seven major shale formations is expected to increase in July to a record 8.5 million bpd. • Market Opinion: Fresh off a week of strengthening due mainly to U.S.-Iran tensions, this morning’s early activity is again showing positivity for both crude and products. WTI crude was up around $5 last week but for it to make a run at $60 it will first have to get through 200 Day Moving Average (DMA) of $59.05. ULSD distillates finished last week with four consecutive positive sessions. Key resistance during this rally will be around $1.95.