Market Shrugs Off Bearish Fundamentals

By: Greg Gill / March 3, 2016

With recurring statistics showing an oversupplied market and talks of a long-term production freeze, it’s no secret that the market is having some trouble finding its way. Yesterday, DOE statistics showed a 10.4 million build in inventories, so why are we bumping up against the next set of resistance levels (WTI: $34.82, HO: $1.1181, Rbob 1.3377)? It seems the market is seeking new information to break it out of the monotonous range levels we seem to be stuck in.

On March 20th, leading members from OPEC will travel to Russia with the intention of advancing conversations with other non-OPEC producers regarding the proposed production freeze. There will be a “dramatic price movement when the meeting takes place,” says Nigerian Minister of State for Petroleum Resources Emmanuel Kachikwu.

 If nothing new comes from this meeting, it is likely that the market could start to focus more on the current supply glut, rather than thinking about the “what-ifs” regarding the production freeze. For now, there is little indication what will happen next, so we’ll sit tight and wait for the next piece of news to come.

 

Yesterday for prompt April futures: Heating Oil settled up .0070  at 1.1065 and .0072 on RBOB at 1.3107. 

  • Weekly U.S. demand for refined products was down, with gasoline lower by 450,000 bpd and distillate down by 340,000 bpd
  • Bloomberg.com reports that Deutsche Bank AG, the world’s second largest currency trader, expects the dollar to surge this year. Since crude oil is traded in dollars, there is an inverse relationship between the strength of the dollar and crude prices. A surging dollar could be expected to put additional pressure on prices.
  • Some U.S. shale producers indicated this week they would ratchet up production once prices reach $40-45/barrel.

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Categories: Daily Market Update


Greg Gill

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Greg Gill

I’m passionate about fully understanding my customers’ fuel operations and the fuel markets in which they operate. I want them to view me as their fuel expert. To develop strong, trusting partnerships with customers, I have to provide them with meaningful and timely information to ease the challenges of making smart fuel decisions, allowing them to focus on their core business.


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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