Weekly energy market situation, may 21, 2018 fuels market news 9gag instagram videos


Price strength continues to characterize the post-Iranian-sanctions era. Indeed, crude oil prices have shown strength from a time well before the United States’ reestablishment of barriers to trade by imposing limits on Iranian crude oil exports. WTI has moved over $70 and shows very little inclination to retreat.

Crude oil prices along the forward price curve exhibit backwardation – more current prices are more expensive than more distant prices. June 2018 traded at 71.35 as the week ended on May 18 while June 2019 crude oil was valued at 66.17 — $5.18 cheaper.

Crude oil is backwardated just now. This reflects concerns that current events could interfere with crude oil supply in the near term. Particularly, tension between Iran and Saudi Arabia appears in surrogate conflicts in Syria or Yemen. Nonetheless, the possibility of expanding hostilities applies upward price pressure.

Should concerns over the Middle East persist, one could expect backwardation to remain a feature of the oil markets. An easing of tensions could have the opposite impact. Purchasing June 2020 crude oil futures would establish a heavily discounted position with room to rally.

Newly permitted exports are another reason to be bullish on prices. More than two million barrels of crude are exported daily. Shipping costs are an essential component of the difference between WTI and Brent. Very roughly, shipping costs run about $5.00. Any larger discount for American oils could provide a powerful incentive for added exports. It would be price-support level.

Crude oil supplies decreased in two of the five PAD Districts. PAD District 1 (East Coast) stocks fell 2.4 million barrels, PADD 3 (Gulf Coast) stocks declined 1.5 million barrels. PADD 2 (Midwest) stocks rose 0.8 million barrels, PADD 4 (Rockies) stocks increased 0.2 million barrels, and PADD 5 (West Coast) stocks advanced 1.5 million barrels.

Crude oil inputs to refineries increased 149,000 barrels daily ; there were 16.635 million barrels per day of crude oil run to facilities. Gross inputs, which include blending stocks, rose 125,000 barrels daily to 16.917 million barrels daily.

Distillate fuel oil supply declined 0.1 million barrels from the previous report week to 114.9 million barrels. National distillate demand was reported at 4.222 million barrels per day during the report week. This was a weekly decrease of 84,000 barrels daily.

Net injections topped the 100 Bcf threshold in May for the first time since 2015. Net injections into storage totaled 106 Bcf for the week ending May 11, compared with the five-year (2013–17) average net injection of 87 Bcf and last year’s net injections of 64 Bcf during the same week.

This report week had the largest reported May weekly net injection since May 29, 2015, when net injection reached its record high of 132 Bcf. Net injections during the week averaged 15.1 Bcf/day; net injections will have to average 13.1 Bcf/day for the remainder of the refill season to match the five-year average level (3,806 Bcf) by October 31. Working gas stocks totaled 1,538 Bcf, which is 501 Bcf lower than the five-year average and 821 Bcf lower than last year at this time.

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