Tread Lightly in the Second Quarter.

By: Daniel Guttman / April 5, 2016

WTI crude ended down $1.09/bbl yesterday, settling at $35.70/bbl, its lowest point in the past month. Crude is under tons of pressure over the last 3 to 4 days due to some comments made late last week: Saudi Arabia’s deputy crown prince said that the Kingdom is essentially unwilling to be a swing producer on its own anymore, and would only agree to production cuts if Iran and other major producers agreed to do the same. Deputy crown prince…has a nice ring to it. You can thank him for being a paramount factor in the market falling over the past several days.

With that driving the market, one thing is for certain. This quarter will be a precarious one, considering the market has shifted in alternate directions as a result of quotes from our dear ole friends in OPEC, along with some from non-OPEC producers. To add to the current commotion, we have 2 meetings to focus on. On Sunday, April 17, a combination of over 12 OPEC and non-OPEC countries are set to meet in Doha to discuss the freeze and the second meeting will be on Thursday, June 2, when OPEC is holding its regular twice a year, full ministerial meeting in Vienna to review the state of the market.

Paddling back across the pond to the states, U.S. production has slowed, according to active oil rig counts from oilfield services firm Baker Hughes, which dropped another 10 last week, to a total of 362 (down 802 active rigs the same week last year). Those cuts in oil rigs aren’t putting much of a scratch on the surface of the global oversupply, because U.S. crude stocks are still building. U.S. production back this time last year, was 9.366 mbpd. Current U.S. production is sitting around 9.022 mbpd, which is a drop of only 4% despite losing 800+ rigs. This is a sign that we have higher efficiency at the current rigs we are utilizing.

If we are seeing volatility now, wait until the meetings actually take place. They could cook up a recipe for extreme price swings either way.3416settle.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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