What's Driving this Market?

By: Lindsay Farrell / April 22, 2016

Yesterday ended the three-day rally we saw earlier this week with WTI down $1 to $43.18, ULSD down $0.0324 at $1.2998 and gasoline as an outcast up $0.0091 to $1.5159. According to OPIS, refinery issues in the Gulf Coast region, New York and the Midwest were credited for yesterday's RBOB strength, in particular several key gasoline production units were shut down in the Gulf.

The market seems to be torn between the bearish (oversupplied fundamentals, coupled with talk of increased production by Russia and Saudi Arabia as they battle Iran for market share) and the bullish (talk of a potential production freeze in June and the end of Kuwaiti’s oil workers’ strike).    

 

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Today the market is technically driven with WTI +$1.02 to $44.20, gasoline +$0.0324 to $1.5483 and ULSD +$0.0301 to $1.3299, but does the current rally have legs? Some say yes, some say “not so fast.”  Goldman Sachs has told clients that while the rally has upside potential, there still must be a shift in fundamentals for a sustainable rally to occur.

An interesting side effect of the extended slump in oil prices is Saudi Arabia’s decision to diversify its economy in order to reduce its reliance on oil revenues. According to Bloomberg, 90% of Saudi Arabia’s budget relies on the petroleum sector. Low oil prices have resulted in a $200 billion Saudi budget deficit. The kingdom recently announced plans to sell off a small percentage of its state-run oil company, Saudi Aramco, in an IPO that would create a $2 trillion wealth fund.

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Categories: Daily Market Update


Lindsay Farrell

Written by

Lindsay Farrell

As Manager of Quality Assurance and Regulatory Compliance, Lindsay Farrell is responsible for fuel operability across the company’s terminals and customer sites, as well as keeping up-to-date with the latest regulations and best practices within the industry.


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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