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MarketWatch

Refined Products
3.2.2015

Recap:  Oil markets rallied Friday as March NYMEX ULSD (HO) led the way higher upon settlement to expire along with the March NYMEX RBOB (Gasoline) futures. March NYMEX USLD (HO) settled up 16.31 cents or a whopping 7.6% to $2.2989 as technical traders blew through three resistance points and expanded the March-April ULSD backwardation to 32.52 cents. Happy to see the March contract expire, the incoming April ULSD futures contract moved up a sizeable 8.04 cents to $1.9737. March NYMEX RBOB (Gasoline) expired on Friday as well, up 6 cents to $1.7676, while the incoming April RBOB futures contract settled up 7.71 cents to $1.9779. The over 20-cent difference between the March and April RBOB contracts reflects the fact that this incoming April contract is the more expensive summer grade, lower RVP variety. The crudes followed the robust gain Friday, with ICE Brent Crude gaining 4.2% or $2.53 to $62.58 while NYMEX (WTI) Crude gained 3.3% or $1.59 to settle at $49.76, still under $50.  As you can see from the NYMEX ULSD (HO) continuous chart below, the month of February provided a lot of volatility as it headed in a mostly steep, upward direction. "The oil markets have been whipsawing in recent weeks with investors weighing signs of impending supply cuts and improving demand against indications of continuing global oversupply. The market has arrested the steep fall that prevailed from June to late January, but remains volatile as traders assess whether the market rout is over. Brent, the global price benchmark, is up more than 13% in February while U.S. crude is broadly flat for the month." (Dow Jones 2-27-15)

Currently, oil markets are down across the board. April NYMEX ULSD is down 3.91 cents to $1.9346, April RBOB is down 3.35 cents to $1.9444, NYMEX Crude is down 61 cents to $49.15, and ICE Brent is down $1.27 to $61.31. The April-May ULSD backwardation currently stands at 3.9 cents, a far cry from 32.52 cents!

The Baker-Hughes Drilling Rig Activity Report  seems to be the new Friday go-to report, and with drilling rigs trending lower, bulls have been able to settle every Friday higher since January 16th, or the past 7 weeks. Baker Hughes has been releasing their drilling rig data since 1944 every Friday at 1PM (ET) and it was no surprise that it showed another reduction: 33 oil rigs lower than the prior week to 986, 31% lower than last year. However, oil production continues to exceed the dropping drill rig count (see chart on link below) as the more less-productive rigs come off-line first. "In a note to clients last week, Damien Courvalin of Goldman Sachs said, "The rig count decline is still not sufficient, in our view, to achieve the slowdown in US production growth required to balance the oil market." Courvalin added: "The flexibility in cutting non-contracted rigs and associated cost deflation along with the producer hedging that has occurred over the past weeks and the recent wave of equity issuance raise the risk that the US production slowdown will be delayed." (BusinessInsider.com 2-27-15)

 

Speculator "Spec" Watch:  Net speculative length decreased for NYMEX (WTI) Crude and for NYMEX RBOB, and the net-short position for NYMEX ULSD (HO) got smaller.  According to the CFTC's Commitments of Traders Report released Friday for reporting through Tuesday, February 24, 2015, the Money Manager (Speculative) category for NYMEX (WTI) Crude, net speculative length (combined futures and options contracts ) decreased 3% from the  previous week of 209,158 futures and options contracts to 202,609. NYMEX RBOB net speculative length declined 7.2% from 44,383 futures and options down to 41,189. NYMEX ULSD (HO) speculators decreased their net-short position 25% from -20,278 futures and options contracts to -15,229 contracts. (Negative representing net-short position.)




View today's oil markets MarketWatch report in a downloadable format by clicking here.
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Natural Gas
3.2.2015

On Friday, February 27th, the April NYMEX Natural Gas Futures Contracts opened at $2.704, a tad over Thursday’s closing price of $2.697.  Amidst the noise of the opening minutes of trading, the contract bounced down to the intraday low of $2.701, but then vaulted up easily to attain the intraday high of $2.745 around 9:40AM.  Inching flatly near the $2.73 mark for almost the next two hours, prices were swamped beneath the $2.71 level around 11:30 AM, but recuperated quickly enough to greet noon in the comfortable $2.72s.  With no change in the forecast of unseasonably frigid temperatures to mid-March, April continued a nearly horizontal path along the $2.73 line, finishing Friday at $2.734.

This morning in Globex, WTI Crude was down 55 cents; Natural Gas was down slightly; and, both Heating Oil and Gasoline were down more than four cents.

Cash prices were higher in New England and lower in New York.  

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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