Energy Market Update January 10, 2018
,Inc.
Energy Market Update January 10, 2018 NYMEX Prices Close February Crude Oil CrudeFebruary Oil Gasoline February Heating Oil February Natural Gas
$63.57 60 $1.8327 $2.0807 $2.905
Wk. Change +1.89 +0.0344 -.0074 -.106
MARKET COMMENTS: The oil market continues to trade mostly higher following a mixed inventory report today. Demand was up this week in nearly all categories and exports were higher for distillates and propane, lower for gasoline and crude oil. U.S. crude production was down by 290,000 barrels/day- all of it lower 48. Keep in mind that refineries don’t run as well in the arctic weather that we had last week, and wellheads freeze up as well. Crude
3Yr Avg. -4.948 419.5 450 +1.5000/-6.000 Change
DOE EST. Propane
API’s
Total
Gasoline
5 Yr. Avg. 384
3Yr Avg. 236 +4.135 237.3 +6.9000/-2.0000 Change
Total
Distillate Fuel
5 Yr. Avg. 231
3Yr 5 Yr. Avg. Avg. 144 +4.254 143.1 155 +7.3000/-2.1000 Change
Total
Total 61.7 -6.3
Midwest 18.7 -2.9
Gulf 35.0 -2.5
Crude -11.190 Cushing -2.516
Gasoline +4.338
Distillates +4.685
Weekly propane exports picked back up again last week after dipping way down in the prior week. Trade talk still indicates that exports are expected to be lower in 2018, but it will all depend upon the arbitrage. The U.S. actually exported an average of more gallons in 2016 than in 2017.
The Trump administration proposed opening up nearly all the country’s offshore areas for oil drilling, a move that would touch every coastal state, some that have been off limits to drillers for decades.
OPEC continues to monitor tensions inside Iran as well as Venezuela’s economic crisis, but will only boost production output if there are significant and sustained production disruptions from these two countries. In December Venezuela’s crude production dropped to its lowest level in more than 15 years, but Iran’s output has not been affected yet by the anti-government protests. The average diesel price in the U.S. rose 7 cents to $2.97 per gallon as of January 1, 2018. This is about 39 cents higher than year ago at this time. The Midwest price increased about 8 cents to $2.94 per gallon, and the Gulf Coast price increased nearly 7 cents to $2.77 per gallon.
U.S. oil rigs have steadied out during the last quarter, but Canada’s rigs have plunged, falling 74 rigs in the last week of 2017. Alberta lost the most, with Saskatchewan a close second. The culprit is low prices for Western Canada Select (WCS). WCS often trades at a huge discount to U.S. crude because it’s a heavy oil, but the discount grew during November and December when the Keystone pipeline had to make a repair which contributed to a buildup of stock in Canada. Canada has made valiant efforts to build new pipelines to move their landlocked crude, but they have been thwarted at nearly every turn. Most of their excess crude comes to the Midwest, which is particularly suited to run the heavy crude. Canada is the U.S.’s largest energy trading partner. Canada’s pipelines are at capacity right now, and rail cannot make up the difference, which is being diverted into storage.
The most recent 8 to 14 day weather forecast, which is valid through January 18th, is finally calling for mostly normal temperatures throughout the Midwest. In addition, west of the Mississippi temperatures are expected to be above normal. This should give the propane market a point to “take a breath”, as demand has been aggressive since the end of December.
Energy Market Update January 10, 2018 NYMEX Prices Close February Crude Oil CrudeFebruary Oil Gasoline February Heating Oil February Natural Gas
$63.57 60 $1.8327 $2.0807 $2.905
Wk. Change +1.89 +0.0344 -.0074 -.106
MARKET COMMENTS: The oil market continues to trade mostly higher following a mixed inventory report today. Demand was up this week in nearly all categories and exports were higher for distillates and propane, lower for gasoline and crude oil. U.S. crude production was down by 290,000 barrels/day- all of it lower 48. Keep in mind that refineries don’t run as well in the arctic weather that we had last week, and wellheads freeze up as well. Crude
3Yr Avg. -4.948 419.5 450 +1.5000/-6.000 Change
DOE EST. Propane
API’s
Total
Gasoline
5 Yr. Avg. 384
3Yr Avg. 236 +4.135 237.3 +6.9000/-2.0000 Change
Total
Distillate Fuel
5 Yr. Avg. 231
3Yr 5 Yr. Avg. Avg. 144 +4.254 143.1 155 +7.3000/-2.1000 Change
Total
Total 61.7 -6.3
Midwest 18.7 -2.9
Gulf 35.0 -2.5
Crude -11.190 Cushing -2.516
Gasoline +4.338
Distillates +4.685
Weekly propane exports picked back up again last week after dipping way down in the prior week. Trade talk still indicates that exports are expected to be lower in 2018, but it will all depend upon the arbitrage. The U.S. actually exported an average of more gallons in 2016 than in 2017.
The Trump administration proposed opening up nearly all the country’s offshore areas for oil drilling, a move that would touch every coastal state, some that have been off limits to drillers for decades.
OPEC continues to monitor tensions inside Iran as well as Venezuela’s economic crisis, but will only boost production output if there are significant and sustained production disruptions from these two countries. In December Venezuela’s crude production dropped to its lowest level in more than 15 years, but Iran’s output has not been affected yet by the anti-government protests. The average diesel price in the U.S. rose 7 cents to $2.97 per gallon as of January 1, 2018. This is about 39 cents higher than year ago at this time. The Midwest price increased about 8 cents to $2.94 per gallon, and the Gulf Coast price increased nearly 7 cents to $2.77 per gallon.
U.S. oil rigs have steadied out during the last quarter, but Canada’s rigs have plunged, falling 74 rigs in the last week of 2017. Alberta lost the most, with Saskatchewan a close second. The culprit is low prices for Western Canada Select (WCS). WCS often trades at a huge discount to U.S. crude because it’s a heavy oil, but the discount grew during November and December when the Keystone pipeline had to make a repair which contributed to a buildup of stock in Canada. Canada has made valiant efforts to build new pipelines to move their landlocked crude, but they have been thwarted at nearly every turn. Most of their excess crude comes to the Midwest, which is particularly suited to run the heavy crude. Canada is the U.S.’s largest energy trading partner. Canada’s pipelines are at capacity right now, and rail cannot make up the difference, which is being diverted into storage.
The most recent 8 to 14 day weather forecast, which is valid through January 18th, is finally calling for mostly normal temperatures throughout the Midwest. In addition, west of the Mississippi temperatures are expected to be above normal. This should give the propane market a point to “take a breath”, as demand has been aggressive since the end of December.
