New Year, But Same Story

By: Daniel Guttman / January 4, 2016

Crude futures can be seen on the rise this morning due in part to rising geopolitical tensions in the Middle East. Over the weekend, following the execution of a noteworthy Shiite cleric and a retaliation attack shortly thereafter, the Saudi government cut its ties with Iran. Consequently, WTI this morning is up $0.75 to $37.79 with heat and RBOB following suit up $.0273 and $.0362 respectively. However, “We don’t see geopolitical tensions having any kind of lasting impact on oil prices,” Eimear Daly, a currency strategist at Standard Chartered Plc in London, said in an interview with Bloomberg Television. “We’ve seen geopolitical tensions come and go in the oil price and we’re looking a lot more at supply and demand.”

Another year has passed, and a new year is in the works. However, it seems as though we are following the same story. We enter 2016 with clearer-than-day information that Saudi Arabia will not change their production strategy—just as we did in 2015. As 2016 begins, a contango (a situation where the future spot price is below the current price, and people are willing to pay more for a commodity at some point in the future than the actual expected price of the commodity) price structure exists in the futures market—just like there was last year. Finally, just like last January, a large crude surplus exists domestically, causing a shortage of on-land storage capacity with downward pressure weighing on global crude prices.

Will the new year bring a change of plot to this storyline?


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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