"They Wills" vs. "They Wont's"

By: Matt Rosenberg / October 26, 2016

Crude oil prices fell yesterday, closing down $0.56 to settle at $49.96 per barrel, below the psychological $50.00 mark.  Heating oil and RBOB also finished lower at $1.5631 and $1.5005, respectively.  This morning the market is off slightly as traders digest the API and EIA data, as well as OPEC production news, comments and rumors ahead of next month’s meeting.  In addition, the dollar is influencing the market, trading at close to a nine month high.  According to the API, crude stockpiles had a build of 4.8 million barrels, exceeding an expectation of a 1.7 million barrel build.  Gasoline had a build of 1.7 million barrels, while distillate stockpiles fell by 940,000 barrels.  Today’s Energy Information Administration figures released by the DOE are more bullish than the APIs, adding some support to this morning’s initial market numbers.  According to the EIA, crude had a draw of ~ 600,000 barrels, gas drew ~ 2 million barrels and distillates drew 3.3 million barrels.            

In what has now become a matter of the “they will” camp versus “they won’t” camp, OPEC is currently feeling heat from the latter.  Investors continue to be leery that OPEC members will agree to cut or freeze production.  “There have been rumors that Russia may not be on board with the production cuts and Iraq is also apparently seeking an exemption.  The market is starting to question whether the OPEC agreement reached a couple of weeks ago is really as solid as originally thought,” said economist Ryan Djajasaputra, as reported on Reuters.com.  Iraq, OPEC’s second biggest producer behind Saudi Arabia, wants to be exempt from a cut, claiming the revenue is needed in its continued fight against the Islamic State.  Iran has also sought to be excluded as it continues to ramp up production to pre-sanction levels.  With Nigeria and Libya already being exempt from the production cut deal, the pressure is growing on Saudi Arabia.  It faces a decision of either losing market share to other producers as it cuts production more than expected or losing international credibility by changing the terms of the deal.  Ahead of the formal OPEC meeting next month in Vienna, Austria, representatives from both OPEC and non-OPEC countries will meet later this week to discuss details regarding how production cuts will be shared.  One issue that needs to be resolved up front will be how exactly to measure each country’s individual production.  Many within OPEC are not on the same page regarding which reporting sources should be used.

As of this writing all indexes are pointing downward on the NYMEX.   

 

10-26 graph.png

 

10-26-2 blog.png


Categories: Daily Market Update


Matt Rosenberg

Written by

Matt Rosenberg

As a key accounts manager, Matt helps large customers make mission-critical decisions by providing timely advice regarding market conditions.


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