Monday, April 10, 2017

Nymex Overview: Looming Cushing Crude Increase Derails Market Advance


There was a lot of enthusiasm coming into April, and indeed for the entire second quarter, but some of those bullish sentiments were tarnished this morning when reports indicated that Cushing stocks may have built by more than 750,000 bbl through last Friday.

There are a lot of hedge funds and money managers who want to be long in energy, but they've been burned badly by the consistent inventory builds seen across the 93 days of 2017.

So, oil prices backed off around midday Monday, despite the prevailing view that the second half of the month will see stocks dwindle with demand ratcheting higher. WTI sold off fairly aggressively with a 41ct/bbl loss to $50.19/bbl while June Brent lost 43cts/bbl to $53.10/bbl. Higher numbers out on the curve are seeing some producer selling, but $52/bbl or so does not bring much enthusiasm from the E&P companies.

Venezuela, which loomed as a possible source of news heading into the weekend, has been conspicuously quiet so far this morning. The dollar has suppressed crude a bit, thanks to a rise of about 0.25% in the Greenback.

Gasoline prices reversed course in tandem with crude and May RBOB fell 0.68cts/gal to $1.6962. There is very slight backwardation between May and June and other summer months.

Cash prices for gasoline were surprisingly sedate. The red hot Pacific Northwestern market backed off from its assault on $2/gal but still fetches over $1.96/gal, and most U.S. markets lost 0.25-0.75cts/gal. Ethanol, which is a key component in finished motor fuel, rose quite robustly, adding 2.0-2.8cts/gal. Diesel held its own, and remains about 7cts/gal above last week's lows. May ULSD was off 0.67cts/gal at $1.5680/gal on very quiet volume.

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