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Refined Products

Recap: Oil markets traded in a narrow range Monday, but were still choppy. After the complex started the session down across the board, the products finished just higher and the crudes finished just barely lower.  The products may have diverged from the crudes as the April NYMEX ULSD and RBOB futures contracts are expiring today, March 31st. Their expiration provides additional choppiness due to smaller volume trading. NYMEX ULSD (HO) settled up 37 points to $1.7312 and NYMEX RBOB (Gasoline) settled up 26 points to cross $1.80 to $1.8006. The crudes both settled slightly lower as upcoming concerns over crude storage reaching new levels in the U.S. primed the market for this bearish fundamental feature. NYMEX (WTI) Crude lost 19 cents to settle at $48.68 while ICE Brent Crude lost 12 cents to $56.29. Helping the bearish supply overhang story was the release of inventory data from Genscape Inc., which revealed (ahead of the EIA's weekly release of their DOE Inventory Report Wednesday - see estimates below) that Cushing, Oklahoma crude oil supplies rose 2.8 MMbs through March 27th. (Reuters 3-31-15) This data will be confirmed Wednesday, but could be a precursor to a bearish reaction to record storage levels, as some analysts believe maximum storage capacity levels in Cushing could be reached as early as the end of April or early May.  

Currently, oil markets are down across the board: NYMEX ULSD is down 3.11 cents to $1.7001, but has hit a low so far of $1.6987, NYMEX RBOB is down to its lowest point on the day at $1.7600, down 4.06 cents, NYMEX Crude has broken $48 and is trading down 93 cents to $47.75, and ICE Brent broke $55 this morning, but is trading just above it at $55.07, down $1.22.

Fuel for thought--All eyes are on crude storage filling up, but is there relief in sight? As more refineries move into spring turnaround maintenance, demand for crude will be reduced in the short term. However, the lower petroleum product prices (and the harsh winter) are having some analysts rethink the crude storage capacity maximums in Cushing, OK and floating storage. There is a growing bright spot for oil producers: U.S. demand for refined products. "Now, there are growing signs that the U.S. oil market can avoid the doomsday scenario in which it runs out of room to stockpile surplus crude, a development that oil traders worried would send crude prices into another tailspin. One reason is that refiners, spurred by high-profit margins, are rushing to buy crude and churn out more fuel in response to an unexpectedly swift rise in U.S. road travel and soaring Chinese demand for fuel-hungry sport utility vehicles ... 'On a global basis I think sentiment has definitely shifted,' says Amrita Sen from Energy Aspects. 'The main reason it's shifted is that people are realizing demand isn't actually that bad; in fact, it's phenomenally strong.'" (Reuters 3-31-15)  With refiner margins strong, and transportation demand ramping up, we may see refiners running stronger than normal, helping to alleviate the crude storage issue in the U.S.

DOE Inventory Estimates: For the week ended March 27, 2015, Citi Futures is expecting the following increase (build) or decrease (draw) ranges: 4 to 5 MMb build range for crude stocks,  and the 5-year average is a 2.8 MMb build. For gasoline, Citi Futures is expecting a 2 to 3 MMb draw range, last year there was a  1.6 MMb draw, and the 5-year average is a 1.8 MMb draw.  For distillates, Citi Futures is expecting a  .5 to 1.5MMb draw range, last year there was a  .6 MMb build and the 5-year average is a 1.0 MMb draw. Citi Futures is expecting a .5 percentage point increase in refinery % operable utilization to 89.5%, last year was  87.7%, and the 5-year average is 84.9%.

Click here to view today's Refined Products MarketWatch.
Natural Gas

On Tuesday, March 31st, the front-month NYMEX Natural Gas Futures Contracts opened at $2.669, more than two cents above Monday’s closing price of $2.644.  With spring weather on the near horizon, prices plummeted to the intraday low of $2.635 during the early minutes of trading (around 9:20AM), but refocused thereafter to claim the intraday high of $2.672 near 10:30AM.  Through one of the quietest floor sessions in recent years, the contract moved evenly upon the $2.66 line, and arrived flat at $2.658 upon the final hour mark.  Some increased volatility at 1:30PM knocked prices as high as $2.667, but a flurry of selling quickly pushed the contract down through the final hour to finish at $2.640 on Tuesday. 

This morning in Globex, WTI Crude was up 10 cents; Natural Gas was flat; and, both Heating Oil and Gasoline were slightly up.

Cash prices were lower in New England and slightly higher 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 or call 1-855-466-2842.