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Refined Products

Recap:  After posting a new low for the fourth straight session, WTI traded back above $50 a barrel, as focus turned to this weekend's meeting between OPEC and non-OPEC members. Initially, prices continued their downward move, falling on reports that Russia perceives that the meeting may possibly be moved due to questions that have arisen. January WTI fell to a low of $49.61 before paring losses. This spot contract settled at $50.84 a barrel, up $1.07, or 2.15%. Brent for February delivered gained 89 cents, or 1.68% to settle at $53.89 a barrel.

January RBOB ended at $1.5047 a gallon, down 35 points, while January heating oil gained 75 points, to settle at $1.6259 a gallon.

Fundamental News:  PIRA executive chairman, Gary Ross, said oil prices will strengthen for the next six months as OPEC implements production cuts.  He said while OPEC members may not comply 100% on production cuts agreed to last week, compliance will be sufficient to accelerate a draw-down of global surplus oil inventories.

RIA News agency cited Russia's Deputy Prime Minister, Arkady Dvorkovich, as saying that Russia's government will not order Russian oil companies to cut output as part of a deal with OPEC.  Separately, a spokeswoman for Russia's Energy Ministry said there were no changes to plans for the OPEC and non-OPEC meeting on December 10th.  This followed reports stated that a series of issues had arisen that could lead to the meeting being postponed.   

An Energy Ministry official said Azerbaijan plans to announce "concrete proposals" for oil output cuts at a meeting of OPEC and non-OPEC producers in Vienna on December 10th. 

Two OPEC sources stated that only 5 of 14 non-OPEC producers have agreed so far to meet the group on Saturday for talks aimed a widening the deal to cut output.  Russia has stated that it will cut 300,000 bpd, meaning other non-OPEC producers combined will need to pledge the same amount to lower output by the 600,000 bpd OPEC wants. 

According to a Reuters survey, OPEC's oil production deal may prove effective in cutting global inventories.  If all members of OPEC honor the deal to cut output, any price gain and fall in inventories could be quickly reversed by rising non-OPEC production.  Analysts polled by Reuters forecast Brent crude futures will average $44.69/barrel in 2016 and $57.01/barrel in 2017, up from previous estimates of $44.78 and $57.08/barrel, respectively.  The analysts also forecast WTI crude will average $43.46/barrel in 2016 and $55.23/barrel in 2017.  

US gasoline margins were falling alongside prices for renewable fuel credits.  US gasoline margins fell by 5.6% to $12.81/barrel.  RINS for the current year traded from 89 to 96.5 cents on Thursday morning, versus 99 cents previously. 

Commerzbank sees the average Brent crude price at $50/barrel and $53/barrel for 2017 and 2018, respectively.  It forecast a WTI price of $46/barrel in the fourth quarter of 2017.  It also stated that OPEC's discipline is likely to dwindle during the course of the year. 

Gasoline stocks independently held in the Amsterdam-Rotterdam-Antwerp hub in the week ending December 8th increased by 3.54% on the week and by 27.27% on the year to 994,000 tons.  Gasoil stocks fell by 5.78% on the week and by 30.09% on the year to 2.639 million tons while fuel oil stocks increased by 17.28% on the week but fell by 38.25% on the year to 733,000 tons. 

Early Market Call - as of 9:00 AM EDT

WTI - Jan $51.30, up 47 cents

RBOB - Jan $1.51, up 51 points

HO - Jan $1.6345, up 85 points 

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Natural Gas

Thursday, December 8th, saw the front-month NYMEX Natural Gas Futures Contracts open at $3.595, nearly a penny below Wednesday’s closing price of $3.603.  Trending higher early on, the contract rose steadily until stabilizing near $3.645 at 10:00AM.  Trading sideways until the release of the weekly storage report thirty minutes later, prices shot skyward upon news of a bullish withdrawal.  Climbing as high as $3.680, the contract then reversed direction to mark the intraday low of $3.574 at 11:00AM.  Aided by continued forecasts of below-normal temperatures, traders drove prices higher for the majority of the afternoon, tallying the intraday high of $3.699 at 2:20PM as January closed higher on Thursday at $3.695

The EIA Natural Gas Storage Report published on Thursday showed a 42 BCF withdrawal from storage for the week ended December 2nd – larger than the market estimate of 35 BCF.  Total working gas in storage was reported as 3,953 BCF, 1.3% above this time last year and 6.9% above the five-year average.

This morning in Globex, WTI Crude was up 51 cents; Natural Gas up four cents; Heating Oil was up one cent; and, Gasoline was up one cent.  Additionally, cash prices were higher inNew York and New England.

Natural Gas Glossary

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