June Should Keep Everyone On the Edge of Their Seats

By: Daniel Guttman / May 31, 2016

To start things off, I hope all of you had a great weekend with your families and an even better Memorial Day yesterday. Memorial Day is a day to remember the fallen and to think about why we were able to grill out with our friends and family, go boating, and have a great time yesterday. Every single day we wake up should be Memorial Day. One quote that is a personal favorite of mine was John F. Kennedy’s best quote from his 1961 inaugural address: “Ask not what your country can do for you, ask what you can do for your country.”

As May comes to a close, let’s recap how tumultuous this month really was. Crude was sitting around $45 a barrel on May 2, and the market and worldwide news seemed to be giving off bearish sentiment. The Kuwait strike ended and there were rumors of increased crude supply in Cushing and more rumors of increased production by OPEC. OPEC hit its highest level of production since 1989 at 33.217 mbpd. Things seemed to be going well for some industries and consumers that enjoy a falling market, until disaster struck. Wildfires in the heart of Canada’s main oil-producing region caused evacuations and shut downs. It was known that this was going to cause long term effects on inventory levels stateside throughout May. On May 16, Goldman Sachs stated that it was raising its March crude price forecast for WTI from $45/bbl to $50/bbl for the second half of 2016.

Goldman Sachs has been spot on, so far. WTI crude hit $50/bbl during the early morning of May 26, and today it is hanging right around $50, currently at $49.91 as of 10:00 a.m. EST. May’s lowest WTI level was around $43.25 on May 10. Since then, we have seen a consistent rise in WTI, hitting $48.50 around May 18, and reaching $50 on the 26th as stated above. As we continue to go day-by-day thinking of the tantalizing thought of crude dropping to $26/bbl on the NYMEX back in February, there are still bearish signs that can soften the market toward those levels. OPEC meets on Thursday, June 2, and there is little expectation of an announcement of an agreed production cut. If nothing comes from that meeting and Saudi Arabia/Iran add another 500,000 bpd of production between the two of them, that could affect the market as their production could reach the 33.5 mbpd range. Also, once everything cools off in Canada, supply disruptions could cease, impacting inventory levels.

Interesting news:

  1. Dollar strength is another factor in the rising and falling of crude prices, because it has an inverse relationship to the oil market.
  2. Keep an eye on news in Canada, Nigeria, and Venezuela. All three could impact this market, one way or the other. 
  3. Speaking of Canada, key producer Suncor Energy is set to partially restart its oil facilities by the end of the week, but it is known this morning that the wildfires have disrupted operations throughout the region to the point that it affected Canadian oil output by one million b/d.527_settle.png

Categories: Daily Market Update


Daniel Guttman

Written by

Daniel Guttman

With a background in wholesale and commercial sales as well as pipeline scheduling, Daniel is currently the Manager, Business Development in the Card Access Fuels department. He is tasked to find new and innovative solutions to increase sales opportunities for the sales team while managing and evaluating internal department processes. He assists with day to day personnel management, customer data analysis, as well as the daily Pacific Pride inventory and pricing direction.


Guttman Energy Daily Market Update Disclaimer – The information contained in this market update is derived from sources believed to be reliable; however this update could include technical inaccuracies or typographical errors and Guttman Energy does not guarantee the accuracy, completeness or reliability of this update. FURTHERMORE, THIS UPDATE IS PROVIDED "AS IS," WHERE IS, WITH ALL FAULTS AND WITHOUT ANY WARRANTY OR CONDITION OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY. GUTTMAN ENERGY ALSO SPECIFICALLY DISCLAIMS ALL EXPRESS AND IMPLIED WARRANTIES. YOU USE THIS UPDATE AT YOUR SOLE RISK. This update and any view or comment expressed herein are provided for informational purposes only and should not be interpreted in any way as recommendation or inducement to buy or sell products, commodity futures or options contracts.


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