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MarketWatch

Refined Products
8.22.2014

Recap: Oil markets moved higher Thursday, led by NYMEX RBOB (Gasoline), which steadily moved up during the day, settling up 3.49 cents to $2.7475. Perhaps it was spurred by an AAA report issued yesterday indicating an increase travel demand for the upcoming Labor Day holiday (see below). NYMEX ULSD (HO) also edged higher, up 1.17 cents, and settled at $2.8375. NYMEX (WTI) Crude settled up 51 cents to $93.96 while ICE Brent crude was up 35 cents to $102.63.  Currently, oil markets are lower with NYMEX ULSD (HO) down slightly 4 points to $2.8371, NYMEX RBOB down 66 points to $2.7409, NYMEX Crude down 39 cents to $93.57, and ICE Brent down 19 cents to $102.44. Markets will be looking to statements from Fed Chair Janet Yellen later today, and those statements will likely impact market sentiment as signs that the U.S. economy continues to improve in a global market where other economies are weakening across Europe and in China. 

U.S. Economy - Stronger Signs: "U.S. home resales rose to a 10-month high in July and the number of Americans filing new claims for unemployment benefits fell last week, signaling strength in the economy early in the third quarter ... existing home sales increased 2.4% to an annual rate of 5.15 million units. That was the highest reading since last September and confounded economists' expectations for a pullback ... the Labor Department said initial claims for state unemployment benefits fell 14,000 to a seasonally adjusted 298,000 for the week ended Aug. 16." (Reuters 8-21-14) 

China, on the other hand, seemingly weak oil demand: "Chinese apparent product oil demand fell -2.4% YoY [year over year], the worst reading since January and a reversal from the 2.5% YoY growth seen in Q2. The reversal was broad-based across the range of products. Product net imports also declined with estimated true total product net imports falling to 105-k b/d down -443-k b/d YoY (-81%). (Citi Research 8-21-14) 

Labor Day Weekend Demand Outlook: "ORLANDO, Fla., (August 21, 2014) – AAA Travel projects 34.7 million Americans will journey 50 miles or more from home during the Labor Day holiday weekend, the highest volume for the holiday since 2008 and a 1.3 percent increase over 2013. Nearly 86 percent of travelers (29.7 million) will celebrate the holiday with a final road trip before summer comes to a close and children head back to school. The Labor Day holiday travel period is defined as Thursday, August 28 to Monday, September 1." (Source: AAA Travel 8-21-14) 

Hurricane Watch: NOAA's National Hurricane Center in Miami, is tracking a tropical disturbance that is expected to move near the Bahamas on Saturday, and now has a high probability, over 80% chance in the next 5 days, of turning into a hurricane (see chart below). The projected path is expected to turn up the East Coast similar to Hurricane Bertha, which we saw earlier this year (see NOAA's chart below). 

Mexico's Landmark Energy Legislation Signed Into Law: Last week, Mexican President Enrique Pena Nieto signed into law landmark energy reform that is designed to encourage foreign investment into their energy sectors as the energy monopolies held by state-owned Pemex (national oil company) and CFE (electric utility) will be open to foreign, private investment. Oil majors like BP, Exxon Mobil, Chevron and Royal Dutch Shell are expected to compete for development deals next year, in which new contractual frameworks allow for a cut of profits or production, but commercial details will not be available until the Mexican finance ministry establishes them for upcoming public tenders.  Click here to view today's Refined Products MarketWatch.
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Natural Gas
8.22.2014

On Thursday August 21st the Front-Month Natural Gas Futures Contracts opened at $3.862, almost three cents above Wednesday’s closing price.  September inched higher after the open, climbing up to $3.907 at 10:25AM, as the Market awaited the release of the EIA Natural Gas Storage Report.  This turned out to be the intraday high.  As soon as the bearish weekly storage report hit the wire, September tumbled down nearly 12 cents to the intraday low of $3.786 in a matter of minutes.  This latest storage report renewed traders’ fear of a negative natural gas outlook, as inventory continued to swell amid robust production and low demand.  While the Market was absorbing the impact of the unfavorable report, September recovered and hovered around the $3.81 mark through the rest of the morning trading hours.  The afternoon session found September bouncing back, as traders realized the Market was over-sold.  By 1:45PM, September had reached the $3.90 mark once again, recouping most of the losses from this morning.  After drifting sideways during the last 30 minutes of trading, September closed at $3.889 on Thursday.      

The EIA Natural Gas Storage Report published yesterday showed an 88 BCF injection to storage for the week ended August 15th.  This compares to a 58 BCF injection at this time last year and a five-year average injection amount of 48 BCF.

This morning in Globex, WTI Crude was down 29 cents; Natural Gas was down slightly; and, both Heating Oil and Gasoline were flat.

Both New England and New York cash prices were down slightly.

 

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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