Rise and Fall of the First Quarter

By: Daniel Guttman / April 29, 2016

The start of the New Year looked promising for end users but not so swell for shale producers. From the beginning of November 2015 to mid-January 2016, diesel prices went from $1.5000 on the NYMEX, to a low around $.8650. That’s an estimated $.6350 plummet in that two and a half month stretch. With the constant reports of global oversupply of crude surrounding the market, it wouldn’t have been a surprise if prices fell below $.8650 after the continual drop off. To the dismay of consumers, OPEC held a meeting to discuss the possibility of a crude freeze. At first, this meeting was a threat to prices and most OPEC and non-OPEC users were all aboard with Saudi Arabia and Russia for a crude freeze. There was a dark horse behind the scenes in Iran that frustrated the highest producing nations (Saudi Arabia and Russia).

Two weeks before the infamous meeting, the market showed signs of hope, dropping down to $1.0600 and leaving the door open for it to reach January levels. After the meeting on the 17th was a bust, it was almost a shoe-in for the bears to roam wild. Then came a strike in Kuwait and a weaker U.S. dollar, leading to a non-stop surge heading into the 2nd quarter.

What will May, June, and July hold? The Saudis reported that they will push oil output higher, near record highs, to meet the summer demand for power. Could this be a positive sign? Apparently not, because it is unlikely this will flood the market, sources say. The global economy is struggling mightily, with the U.S. economy at the forefront of the sluggish activity. If history repeats itself, many have cautioned that the economy could make a turnaround in the months after quarter 1, but it remains weak in the beginning of the 2nd quarter.

Interesting news:

  1. U.S. gasoline consumption could very well reach a record year in 2016.
  2. As of 12:30 PM EST, diesel is down $.0170, gas is down $.0100, and crude is down 22cts.
  3. Petromatrix says Saudi Arabia’s Aramco will nearly finish its expansion of Shaybah oilfield by the end of May from .75 mill bpd to 1.0 mill bpd.
  4. WTI and Brent futures have gained nearly $10/bbl this month, largely due to near-term supply concerns based off of production outages in Kuwait, Iraq, Nigeria and the North Sea.42816settle.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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