Market Flies Like An Eagle

By: Mike Dombroski / October 13, 2017

The oil market has found a bid today on the heels of strong Chinese oil import demand, continued strife in Iraq, and international traders covering shorts after yesterday’s DOE report.

China imported 9 million barrels of oil per day in September, after it averaged 8.5 million barrels per day year-to-date. As the world’s largest oil importer, it clearly illustrates that oil demand is on the uptick and is contributing to today’s rally.

Also contributing to the rally is the continued strife between the newly-voted independent Kurds and Iraqis over the oil-rich territory. Local Iraqi television reported that tens of thousands of Kurdish fighters were sent to defend their region from outside threats. Iraq does not want to lose control of approximately 600,000 barrels per day of oil production for obvious reasons.

Another component giving oil a bid today is international traders buying up their shorts from Wednesday night after the bearish API data was released. The DOE report yesterday showed a draw in crude oil as one of the bloggers Gabreal Preisendorfer noted yesterday, and so traders that were short were forced to buy positions back, especially with the bullish headlines this morning.

On the weather side of things, yesterday the U.S. Climate Prediction Center said there is now a 67% chance, up from 61%, of a weak La Niña occurring between December and February. During a La Niña, sea surface temperature is cooler-than-average in the Eastern Central Pacific Ocean. This typically makes the upper Midwest into New York see temperatures that are cooler-than-average. With the increasingly tighter distillate supply situation, a colder winter may potentially mean higher prices for heating oil relative to crude oil prices (crack spreads).

One more note on weather during this lovely Friday October the 13th, Accuweather reported today that conditions are still favorable for more tropical storms and hurricanes to develop within the coming weeks. Hurricane Expert Dan Kottlowski noted that “since the satellite era began during the early 1960s, 2017 is the only year where there have been 10 consecutive hurricanes in the Atlantic basin.” Hopefully we are done setting records in regard to this, but it is prudent to know that the season is not over yet.

November WTI crude oil trades higher by $0.75 to $51.35/barrel, RBOB is up by $0.0317 to $1.6149/gallon, and ULSD is higher by $0.0268 to $1.7923/gallon.

10-12-17 market.jpg


Mike Dombroski

Written by

Mike Dombroski


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.


Comments

Subscribe to our blog

Price Feed

Stay up-to-date on current fuel prices and market trends with our NYMEX price feed (15 minute delay to the live market).

© 2018 Market data provided and hosted by Barchart Market Data Solutions. Fundamental company data provided by Morningstar and Zacks Investment Research. Information is provided 'as-is' and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see disclaimer.

Categories

Contact Us