MarketWatch | Refined Products
Tuesday, July 11, 2017
Market Commentary
Recap: Last week’s losses were extended in early morning trading, as oil futures fell to their
lowest level in over a week. The sell-off, however, was unsustainable as traders geared up for
OPEC’s upcoming July 24th meeting set to be held in Russia. It is highly anticipated that
exemptions from supply cuts will be lifted from Nigeria and Libya, as both countries have been
ramping up output. Prices climbed to new session highs before paring gains. September Brent
settled at $46.88 a barrel, up 17 cents, while August WTI finished at $44.40 a barrel, also
gaining 17 cents.
Products also inched higher, with August RBOB rising under half a cent to a settlement of
$1.501 a gallon, while August heating oil added just over a half penny to settle at $1.454 a
gallon.
Fundamental News: Russia’s Energy Minister, Alexander Novak, said Libya and Nigeria may
attend a joint meeting between OPEC and non-OPEC this month. Meanwhile, Kuwait’s Oil
Minister, Issam Almarzooq, said Libya and Nigeria may be asked to cap their crude output soon
in an effort to rebalance the market. Both nations have increased their output since they were
exempt from the OPEC-led output cut agreement. Six ministers from OPEC and non -OPEC
countries, including Kuwait, Venezuela, Algeria, Saudi Arabia, Russia and Oman will meet on
July 24th in St. Petersburg, Russia, to discuss the current situation in the oil market. The group
called the Joint Ministerial Monitoring Committee, could recommend expanding the pact to
the wider group. Nigeria’s Oil Minister, Emmanuel Ibe Kachikwu, said Nigeria was not opposed
in principle to joining OPEC’s production cuts, but would have to wait and see if production
returned to acceptable levels. The head of Libya’s National Oil Corp did not indicate any
willingness to cap output yet, saying Libya’s humanitarian problems must be considered in any
talks on the subject.
Separately, Russia’s Energy Minister, Alexander Novak, said he is scheduled to meet with
Qatar’s Energy Minister, Mohammed al-Sada, later on Monday.
Meanwhile, Kremlin Spokesman, Dmitry Peskov, said there are no new agreements on the
global oil output cut between OPEC and non-OPEC producers. Last week, Russia’s President,
Vladimir Putin, said that Russia planned to keep cooperating with other countries to harmonize
global energy markets and reduce price volatility.
Saudi Aramco’s chief executive, Amin Nasser, said the world may be heading for an oil supply
shortage following a steep decline in investments and a lack of new conventional discoveries.
He said unconventional shale oil and alternative energy resources are an important factor to
help meet future demand but it is premature to assume that they can be developed quickly to
replace oil and gas.
Iran’s leading oil tanker operator, NITC, said its shipments to Europe were increasing daily and
the company plans to upgrade its fleet to support expansion.
An Iranian energy official said the country is preparing for its first round of oil and gas
exploration tenders since the easing of economic sanctions, and is hoping to attract companies
such as BP and Gazprom. Iran has already been working on deals to develop existing fields
such as South Pars, South Azadegan, Yadavaran, West Karoon, Mansuri and Abe -Timur. NIOC
is planning to tender 14 oil and gas blocks for exploration in the next two to three months.
All NYMEX | Prior Settlements
ULSD (HO)
Month
Prior Settle
Close
$1.4536
$1.4593
$1.4665
$1.4749
$1.4832
$1.4909
$1.4956
$1.4962
$1.4929
$1.4941
$1.4984
$1.5051
$1.5120
$1.5188
$1.5260
$1.5340
Aug-17
Sep-17
Oct-17
Nov-17
Dec-17
Jan-18
Feb-18
Mar-18
Apr-18
May-18
Jun-18
Jul-18
Aug-18
Sep-18
Oct-18
Nov-18
Change
$0.0054
$0.0052
$0.0054
$0.0056
$0.0051
$0.0046
$0.0042
$0.0041
$0.0046
$0.0052
$0.0058
$0.0061
$0.0063
$0.0065
$0.0067
$0.0068
Sprague HeatCurve Oct 2017-April 2018*
One Week
($0.0592)
($0.0606)
($0.0616)
($0.0621)
($0.0630)
($0.0637)
($0.0642)
($0.0639)
($0.0628)
($0.0611)
($0.0598)
($0.0591)
($0.0584)
($0.0574)
($0.0566)
($0.0558)
$1.4878
* Degree Day weighted NYMEX strip (no differentials)
Other Front Month NYMEX
Crude - WTI
Sep BrentCrude - Brent WTI Spread
$2.48
Natural Gas
#########
Gasoline
Jan-00
Close
$44.4000
$46.8800
$2.9290
$1.5007
ICE September WTI-Brent Spread
IIR reported that US oil refiners are expected to shut in 111,000 bpd of capacity in the week
ending July 14th, increasing available refining capacity by 59,000 bpd from the previous week.
IIR expects offline capacity to fall to 29,000 bpd in the week ending July 21 st.
Early Market Call - as of 9:00 AM EDT
WTI - Aug $44.25, down 15 cents
RBOB - Aug $1.4900, down 1.05 cents
HO -Aug $1.4465, down 70 points
August Heating Oil Crack Spread
Change In
August RBOB Crack Spread
This market update is provided for information purposes only and is not intended as advice on any transaction nor is it a solicitation to buy or sell commodities. Sprague makes
no representations or warranties with respect to the contents of such news, including, without limitation, its accuracy and completeness, and Sprague shall not be responsible
for the consequence or reliance upon any opinions, statements, projections and analyses presented herein or for any omission or error in fact.
Change
$0.1700
$0.1700
$0.0650
$0.0023