Energy Market Update December 20, 2017
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Energy Market Update December 20, 2017 NYMEX Prices Close January Crude Oil CrudeJanuary Oil Gasoline January Heating Oil January Natural Gas
$58.09 60 $1.7353 $1.9442 $2.703
Wk. Change +0.083 +0.0800 +0.0440 -0.0040
MARKET COMMENTS: OPEC production fell to its lowest in six months but rival U.S. production was surging faster than expected, meaning oil markets may not rebalance before the end of 2018, the oil cartel said in its closely watched monthly oil report. OPEC is forecasting strong global demand for crude oil in 2018 but now they see output from the United States and elsewhere increasing more than previously expected. The oil cartel’s latest forecast comes just two weeks after the agreement was made to extend output limits with Russia and nine other oil producing nations. OPEC’s goal is to cap production to decrease large global stockpiles of oil that have weighed on prices in recent years. Increased oil supply from outside OPEC could make it difficult to achieve this goal, even as OPEC’s oil production fell in November. On Wednesday the cartel forecasted non-OPEC production will grow by 1 million barrels per day in 2018 which is an upward revision of 120,000 barrels per day from their previous projection. The increase in their forecast is primarily due to higher than expected supply growth in the U.S., Canada, and Kazakhstan. OPEC believes its production will average around 33.2 million barrels per day in 2018, which is a little higher than this year’s levels. Crude Change DOE EST. Propane
API’s
-6.5
3Yr Avg. 436.5 452 -1.500/-7.845 Total
Gasoline
5 Yr. Avg. 422
Change
+1.2
3Yr Avg. 222 227.8 +1.458/-2.614 Total
Distillate Fuel
5 Yr. Avg. 221
Change
+0.8
3Yr Avg. 128.8 143 +3.841/-3.300 Total
Total -3.4 71.3
Midwest -.7 23.6
Gulf -1.9 37.7
Crude -5.222 Cushing +0.07
Gasoline +2.001
Distillates -2.850
5 Yr. Avg. 132
The most recent 8 to 14 day weather forecast, which is valid through December 27th, is calling for a large cold front to settle in throughout the majority of the U.S. This should increase demand for propane during this time frame. In addition, precipitation amounts are expected to be slightly to well above normal.
During the past two weeks in the month of December propane stocks have posted a build, which is highly unusual for this time of year. Current stocks stand and 74.7 million barrels vs. 74.5 million last week. However, they are still running below levels we experienced last year when they came in at 95.6 million barrels.
Despite the expiration of a federal biodiesel blender's tax credit at the end of 2016 domestic production of biodiesel has stayed strong. Biodiesel production increased over time largely because of state and federal incentives. The federal biodiesel blender's tax credit, valued at $1 per gallon (gal), expired several times prior to 2016, most recently at the end of 2014. In those earlier years, Congress ultimately voted to reinstate the tax credit retroactively. On average, biodiesel accounted for about 4% of total diesel consumption in 2016. Similar to corn ethanol, biodiesel production is concentrated in the Midwest and delivered by rail and truck across the country. Since 2014, foreign biodiesel imports—primarily from Argentina and Indonesia—have increased in the East Coast and Gulf Coast regions. In 2016, biodiesel imports from Argentina reached 449 million gallons and accounted for nearly 20% of U.S. biodiesel consumption.
Energy Market Update December 20, 2017 NYMEX Prices Close January Crude Oil CrudeJanuary Oil Gasoline January Heating Oil January Natural Gas
$58.09 60 $1.7353 $1.9442 $2.703
Wk. Change +0.083 +0.0800 +0.0440 -0.0040
MARKET COMMENTS: OPEC production fell to its lowest in six months but rival U.S. production was surging faster than expected, meaning oil markets may not rebalance before the end of 2018, the oil cartel said in its closely watched monthly oil report. OPEC is forecasting strong global demand for crude oil in 2018 but now they see output from the United States and elsewhere increasing more than previously expected. The oil cartel’s latest forecast comes just two weeks after the agreement was made to extend output limits with Russia and nine other oil producing nations. OPEC’s goal is to cap production to decrease large global stockpiles of oil that have weighed on prices in recent years. Increased oil supply from outside OPEC could make it difficult to achieve this goal, even as OPEC’s oil production fell in November. On Wednesday the cartel forecasted non-OPEC production will grow by 1 million barrels per day in 2018 which is an upward revision of 120,000 barrels per day from their previous projection. The increase in their forecast is primarily due to higher than expected supply growth in the U.S., Canada, and Kazakhstan. OPEC believes its production will average around 33.2 million barrels per day in 2018, which is a little higher than this year’s levels. Crude Change DOE EST. Propane
API’s
-6.5
3Yr Avg. 436.5 452 -1.500/-7.845 Total
Gasoline
5 Yr. Avg. 422
Change
+1.2
3Yr Avg. 222 227.8 +1.458/-2.614 Total
Distillate Fuel
5 Yr. Avg. 221
Change
+0.8
3Yr Avg. 128.8 143 +3.841/-3.300 Total
Total -3.4 71.3
Midwest -.7 23.6
Gulf -1.9 37.7
Crude -5.222 Cushing +0.07
Gasoline +2.001
Distillates -2.850
5 Yr. Avg. 132
The most recent 8 to 14 day weather forecast, which is valid through December 27th, is calling for a large cold front to settle in throughout the majority of the U.S. This should increase demand for propane during this time frame. In addition, precipitation amounts are expected to be slightly to well above normal.
During the past two weeks in the month of December propane stocks have posted a build, which is highly unusual for this time of year. Current stocks stand and 74.7 million barrels vs. 74.5 million last week. However, they are still running below levels we experienced last year when they came in at 95.6 million barrels.
Despite the expiration of a federal biodiesel blender's tax credit at the end of 2016 domestic production of biodiesel has stayed strong. Biodiesel production increased over time largely because of state and federal incentives. The federal biodiesel blender's tax credit, valued at $1 per gallon (gal), expired several times prior to 2016, most recently at the end of 2014. In those earlier years, Congress ultimately voted to reinstate the tax credit retroactively. On average, biodiesel accounted for about 4% of total diesel consumption in 2016. Similar to corn ethanol, biodiesel production is concentrated in the Midwest and delivered by rail and truck across the country. Since 2014, foreign biodiesel imports—primarily from Argentina and Indonesia—have increased in the East Coast and Gulf Coast regions. In 2016, biodiesel imports from Argentina reached 449 million gallons and accounted for nearly 20% of U.S. biodiesel consumption.
