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MarketWatch

Refined Products
4.16.2014

Recap: Oil markets started in negative territory on Tuesday morning, but by settlement time at 2:30pm, the products posted positive marginal gains, while the crudes moved marginally lower. NYMEX ULSD (HO) traded in a 3 cent range with a low on the day of 2.9667, but moved higher and fell short of the $3.00 mark at 2.9977 before moving back down to settle up 79 points on the day to 2.9870.  Likewise, NYMEX RBOB (Gasoline) hit a low of 3.0100, and then reversed up to 3.0482 before settling at 3.0421, up 37 points. Crudes most likely were consolidating ahead of the weekly release of the EIA's DOE Inventory Report (see estimates below) along with the expiration of the May ICE Brent Crude futures contract. While the May Brent contract moved lower on the day, losing 33 cents to 103.75 , the incoming June Brent contract posted a slight gain of 29 cents to close at 109.36.

Ukraine takes military action:  The Ukraine-Russian conflict continues to capture headlines as a potential price support to oil markets. In a significant AP report on Tuesday afternoon, "In the first Ukrainian military action against a pro-Russian uprising in the east, government forces said they clashed Tuesday with about 30 armed gunmen at a small airport ... Ukraine's ex-prime minister and presidential candidate Yulia Tymoshenko said Tuesday what Kiev was seeing in the country's east was in effect a war. 'We have to tell the Ukrainians the truth: the Russian Federation is waging a real war against Ukraine in the east.'" Meanwhile, officials from the U.S., European Union, Russia and Ukraine are scheduled to meet in Geneva on Thursday for "negotiations aimed at persuading Russia to back off in Ukraine." This meeting will also be important to figure out how Ukraine will pay for its energy as Ukraine's Naftogaz Ukrainy has stopped paying Russian energy provider, Gazprom, after Gazprom cancelled gas price discounts to push Naftogaz's price to $13.5/MMBtu. Ukrainian aid packages continue to be worked out by the IMF, World Bank, and EU.

DOE Inventory Estimates: The EIA will report its weekly DOE Inventory Report Wednesday morning at 10:30 AM.  CitiFutures is expecting the following increase (build) or decrease (draw) ranges for the following: 1.5 to 2.5  MMb build for crude stocks, 2 to 3 MMb draw for gasoline, a .5 draw to a .5 MMb build range for distillates, and a .5 percentage point decrease in refinery % operable utilization to 87%.  Bloomberg comes in with a crude build at 1.75 MMb, a 1.75 MMb draw in gasoline, and neither a build nor draw in distillate stocks. The 5-year average for this period is a 1.3 MMb build for crude, a 2.8 MMb draw for gasoline, and a .9 MMb decline in distillates.  The American Petroleum Institute (API) released its data Tuesday afternoon with the following results: a crude build of 7.6 MMb, gasoline draw of .5MMb, and a distillate stock draw of 1.1 MMb. Stay tuned for DOE Inventory results Wednesday at 10:30am.

Winter weather in the middle of April? For the evening of April 15th,  Meteorologist John Bagioni of Fax-Alert Weather Service, LLC issued a "Snow, Sleet and Icing Potential" email Tuesday afternoon calling for sleet and snow accumulations of generally 2 to 4 inches in the following Northeast areas: north and west of Albany, NY, most of Vermont and New Hampshire, and interior Maine. NOAA's 6-10 Day Temperature Probability Outlook (see chart below) confirms that we will be seeing colder than normal temperatures in the Northeast and along the East Coast for the next week! Say it isn't so!!

Today's full market watch report in a downloadable format can be found by clicking here.
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Natural Gas
4.16.2014

On Tuesday, the Front Month NYMEX Natural Gas Futures Contract opened at $4.597; almost four cents higher than Monday’s close.  After a small dip, prices began climbing and a little after 10AM hit $4.633 – the intraday high.  The rest of the morning saw prices slowly drop and by noon, May was a little below $4.60.  The noontime weather forecasts did the rest of the work and by 12:20PM, prices had sunk to $4.527 – the intraday low.  May partially recovered and by 1PM, was trading just a shade below $4.57.  Prices stayed around this level for the rest of the day and Tuesday closed at $4.567.  In Globex, WTI Crude is up $1.03, Natural Gas is flat, Heating Oil is up two cents & Gasoline is flat.

The EIA Storage Report due out Thursday is expected to report a 37 BCF withdrawal from storage for the week ended April 11.  The actual figure will compare against a 25 BCF injection for this time last year and the five-year average injection of 37 BCF. 

Both New England and New York cash prices are up significantly.

Natural Gas Glossary

For access to Sprague’s full Natural Gas Market Watch Report including commentary not posted here, please send your request to natgas@spragueenergy.com or call 1-855-466-2842

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