Energy Market Update January 17, 2018
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Energy Market Update January 17, 2018 NYMEX Prices Close February Crude Oil CrudeFebruary Oil Gasoline February Heating Oil February Natural Gas
$63.97 60 $1.8584 $2.0807 $3.259
Wk. Change +.40 +0.0257 +0.0116 +.354
MARKET COMMENTS: Not a lot happened in today’s market, but we still ended higher. Gasoline was the leader, with a suggestion of refinery issues or import issues into the New York Harbor. Tomorrow we will have the Energy Information Administration inventory report, and also the monthly OPEC report. Bullish momentum has slowed down a bit the last couple of days. Nearby propane prices have been higher, and one would expect a report tomorrow that shows high demand and decent exports.
Martin Luther King Day delayed the government inventory report. We will see that tomorrow. Freezing temperatures this week are causing some refinery issues in the U.S. Gulf. Freezing or slightly below freezing is very unusual for Houston, Dallas and Baytown- all home to several large oil refineries. Some of the issues they are facing right now include frozen pipes and potential power outages due to high electricity usage. The daily commute for refinery workers has been difficult in this weather also. U.S. crude production took a big hit last week, mostly due to the bitterly cold weather that is hard on refineries and wellheads. Oil rigs increased by 10 last week, and even though there is a lag factor, the expectation is for U.S. production to increase as well. Everyone in the trade is looking for the 10 million barrel per day mark to be breached this quarter.
More natural gas was withdrawn from U.S. storage lately than during any other time in history because of the arctic blast that blanketed much of the U.S. Temperatures, especially for southeastern states, were significantly lower than normal with sustained periods of subzero weather for many.
At the same time as increased consumption, natural gas production was falling with many wellheads freezing and blocking the flow of gas. The U.S. has received additional gas from Canada helping to offset our production declines.
Certainly the agriculture industry will be keeping an extremely close eye on the drought monitor, as spring gets closer. Portions of the plains are abnormally dry including areas in Iowa and southern Illinois. They are going to need to see a substantial increase in moisture levels before tractors start rolling for planting this spring. However, the 8 to 14 day weather forecast, which is valid through January 28th, is calling for above normal precipitation east of the Mississippi. Last Friday the USDA released the grain stocks report, which pegged U.S. corn stocks at 12.5 billion bushels, up 1 percent from last year. As for soybean stocks, they were reported at 3.16 billion bushels, up 9 percent from last year. The USDA put corn production in 2017 at 14.6 billion bushels, down 4 percent from the 2016 total. They estimated soybean production at 364 million bushels, down 24 percent from the 2016 total. In early June the crude oil market established a low and has since been trending higher with minimal pull backs. Just recently the market was able to penetrate the $60 resistance level, which was the previous high back in June of 2015. This certainly opens the door towards additional shortterm strength.
Energy Market Update January 17, 2018 NYMEX Prices Close February Crude Oil CrudeFebruary Oil Gasoline February Heating Oil February Natural Gas
$63.97 60 $1.8584 $2.0807 $3.259
Wk. Change +.40 +0.0257 +0.0116 +.354
MARKET COMMENTS: Not a lot happened in today’s market, but we still ended higher. Gasoline was the leader, with a suggestion of refinery issues or import issues into the New York Harbor. Tomorrow we will have the Energy Information Administration inventory report, and also the monthly OPEC report. Bullish momentum has slowed down a bit the last couple of days. Nearby propane prices have been higher, and one would expect a report tomorrow that shows high demand and decent exports.
Martin Luther King Day delayed the government inventory report. We will see that tomorrow. Freezing temperatures this week are causing some refinery issues in the U.S. Gulf. Freezing or slightly below freezing is very unusual for Houston, Dallas and Baytown- all home to several large oil refineries. Some of the issues they are facing right now include frozen pipes and potential power outages due to high electricity usage. The daily commute for refinery workers has been difficult in this weather also. U.S. crude production took a big hit last week, mostly due to the bitterly cold weather that is hard on refineries and wellheads. Oil rigs increased by 10 last week, and even though there is a lag factor, the expectation is for U.S. production to increase as well. Everyone in the trade is looking for the 10 million barrel per day mark to be breached this quarter.
More natural gas was withdrawn from U.S. storage lately than during any other time in history because of the arctic blast that blanketed much of the U.S. Temperatures, especially for southeastern states, were significantly lower than normal with sustained periods of subzero weather for many.
At the same time as increased consumption, natural gas production was falling with many wellheads freezing and blocking the flow of gas. The U.S. has received additional gas from Canada helping to offset our production declines.
Certainly the agriculture industry will be keeping an extremely close eye on the drought monitor, as spring gets closer. Portions of the plains are abnormally dry including areas in Iowa and southern Illinois. They are going to need to see a substantial increase in moisture levels before tractors start rolling for planting this spring. However, the 8 to 14 day weather forecast, which is valid through January 28th, is calling for above normal precipitation east of the Mississippi. Last Friday the USDA released the grain stocks report, which pegged U.S. corn stocks at 12.5 billion bushels, up 1 percent from last year. As for soybean stocks, they were reported at 3.16 billion bushels, up 9 percent from last year. The USDA put corn production in 2017 at 14.6 billion bushels, down 4 percent from the 2016 total. They estimated soybean production at 364 million bushels, down 24 percent from the 2016 total. In early June the crude oil market established a low and has since been trending higher with minimal pull backs. Just recently the market was able to penetrate the $60 resistance level, which was the previous high back in June of 2015. This certainly opens the door towards additional shortterm strength.
