Talk Trumps Fundamentals as Market Rally Continues

By: Daniel Guttman / February 4, 2016

Fundamentals remained significantly bearish yesterday with a 12th consecutive weekly build in domestic inventories. However, the U.S. dollar hit a seven year low on speculation that the Federal Reserve might not raise interest rates this year, and with increasing talk of an emergency meeting between OPEC and Russia to support oil prices, the market held a strong rally yesterday. Six producing countries, including OPEC members Iran and Iraq and non-members Russia and Oman, supported a producer meeting; however, no such meeting is planned as of yet and there is still a long way to go toward coordinated production. Right now the market is holding, based on only rumors, as we have heard talk about production cuts fail to materialize many times before.

 Yesterday, March WTI crude gained 20 cents to $32.48, HO finished up $0.0677/gal to $1.0786, and RBOB finished up $0.0129/gal to $1.0137.  This morning, the rally is holding strong with HO trading up about $0.0319 and RBOB is up about $0.0550/gal in light of this sentiment. 

In more bearish news, America now has the highest level of supply for this time of the year in the past 80 years, and with 503 million barrels reportedly stockpiled, we are running tight on space to store it all. Even accounting for domestic production cuts, according to Goldman Sachs analysts, key storage locations are now “bumping up against storage and logistical constraints.” There is a fear that Cushing, Oklahoma might hit storage capacity as the key trading hub is currently at 87% capacity. Over the past several years, Cushing has added more storage to accommodate greater supply. If stocks meet this capacity we could see domestic oil prices fall even further.

blog2-4.jpg

Image Source: CNN Money

0203_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.


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