Crude Wednesday-Friday
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Started by metmike - Aug. 8, 2018, 11:32 a.m.

The liquid energies are getting crushed today.  Crude is currently down over $2/barrel! Unleaded down  almost 8c.


From MarketWatch:

Oil prices retain sharp losses after EIA inventory report    

https://www.marketwatch.com/story/oil-prices-retain-sharp-losses-after-eia-inventory-report-2018-08-08

"Oil prices held on to losses late=morning Wednesday after the Energy Information Administration reported that domestic crude supplies declined by 1.351 million barrels for the week ended Aug. 3. Analysts surveyed by The Wall Street Journal had estimated a fall of 2.3 million barrels in the week.Gasoline stockpiles rose by 2.9 million barrels for the week, while distillate stockpiles added 1.2 million barrels, according to the EIA."





Comments
By metmike - Aug. 8, 2018, 11:35 a.m.
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Crude has been holding the longer term uptrend. Will that be broken?

Crude 3 month chart

                   


Crude1year chart below


                   


Crude 5 year chart below

                   


Crude10 year chart below

               

                   
By metmike - Aug. 8, 2018, 11:37 a.m.
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Unleaded Gasoline Price Charts(not as strong as crude or heating oil): Uptrend on longer term price chart......bull flag short term(or top?) Getting hammered today.

3 month                 

                   


1 Year                

                   


5 year........are we headed back to the highs?

                   


10 Year                

                   
By metmike - Aug. 8, 2018, 11:38 a.m.
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Here are the gas prices at the pump:

USA National Gas Price Heat Map from GasBuddy:

https://www.gasbuddy.com/GasPriceMap?z=4




By metmike - Aug. 8, 2018, 11:39 a.m.
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Weekly US ending stocks of crude oil. Peaked in March 2017 and have been falling sharply since then. Now the lowest in 3.5 years:

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCRSTUS1&f=W

          



         

Weekly ending stocks for unleaded gasoline. Barely peaked in Feb 2017 but have not dropped much...........similar this month to July 2017...still fairly high:

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WGTSTUS1&f=W

                                    


                                             

             

Weekly US ending stocks for distillate fuel oil(heating oil-especially used in the Northeast). Peaked in Feb 2017 and have PLUNGED to the lowest in 4 years and almost the lowest in 10 years:


https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WDISTUS1&f=W

By metmike - Aug. 8, 2018, 11:40 a.m.
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http://charts.equityclock.com/seasonal_charts/futures/FUTURE_CL1.PNG

By metmike - Aug. 8, 2018, 11:40 a.m.
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From the EIA:

Short-Term Energy Outlook

Release Date: August 7, 2018

Global liquid fuels


  • Brent crude oil spot prices averaged $74 per barrel (b) in July, largely unchanged from the average in June. EIA expects Brent spot prices will average $72/b in 2018 and $71/b in 2019. EIA expects West Texas Intermediate (WTI) crude oil prices will average about $6/b lower than Brent prices in 2018 and in 2019. NYMEX WTI futures and options contract values for November 2018 delivery that traded during the five-day period ending August 2, 2018, suggest a range of $54/b to $84/b encompasses the market expectation for November WTI prices at the 95% confidence level. 
  • U.S. regular gasoline retail prices averaged $2.85 gallon (gal) in July, down 4 cents/gal from the average in June. EIA expects that 2018 monthly average gasoline prices peaked in May and forecasts prices will remain relatively flat in the coming months, averaging $2.83/gal in September. EIA expects regular gasoline retail prices to average $2.76/gal in 2018 and in 2019. 
  • EIA estimates that U.S. crude oil production averaged 10.8 million barrels per day (b/d) in July, up 47,000 b/d from June. EIA forecasts that U.S. crude oil production will average 10.7 million b/d in 2018, up from 9.4 million b/d in 2017, and will average 11.7 million b/d in 2019.
  • EIA forecasts total global liquid fuels inventories to decrease by 0.3 million b/d in 2018 compared with 2017, followed by an increase of 0.3 million b/d in 2019. This outlook of relatively stable inventory levels over the forecast period contributes to a forecast of monthly average Brent crude oil prices remaining relatively stable between $70/b and $73/b, from August 2018 through the end of 2019. 
By metmike - Aug. 8, 2018, 11:41 a.m.
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By Jim_M             

            

Even if crude stays at the price it is at, a long roll will net you about $2k a month on 1 contract.


++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

                By metmike -             

                                               

Good point Jim!

Crude for the front month is priced higher than back months...........this is an inverted price structure and considered bullish. Contango (sounds like a Spanish dance).

Normal backwardation is when prices are higher in the back months. 

Contango and Normal Backwardation


https://www.investopedia.com/articles/07/contango_backwardation.asp

  • Contango is when the futures price is above the expected future spot price. Because the futures price must converge on the expected future spot price, contango implies futures prices are falling over time as new information brings them into line with the expected future spot price.
  • Normal backwardation is when the futures price is below the expected future spot price. This is desirable for speculators who are net long in their positions: they want the futures price to increase. So, normal backwardation is when the futures prices are increasing.


https://www.youtube.com/watch?v=bXhQNRsH3uc

By metmike - Aug. 8, 2018, 11:49 a.m.
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From EIA.........at the end of July and the reason that heating oil has been the strongest.

U.S. distillate fuel inventories are low for this time of year

https://www.eia.gov/todayinenergy/detail.php?id=36712


"Inventories of distillate fuel, a category that includes both diesel and home heating oil, were 117.7 million barrels at the end of June, the lowest end-of-June level since 2004. Distillate inventories have generally been lower than the previous five-year (2013–2017) average throughout 2018. Relatively low inventory levels reflect growth in distillate consumption during 2018 that has not been fully offset by increased domestic refinery production or by lower net exports of distillate."

By metmike - Aug. 9, 2018, 1:19 p.m.
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From Futures:

Crude: Days like this

          

                      By Phil Flynn
                                August 9, 2018


http://www.futuresmag.com/2018/08/09/crude-days

"Even in long-term bull markets, you are going to have a day like Wednesday. Crude oil and products crashed down to major support as it was hit with a confluence of headlines and bearish weekly Energy Information Administration (EIA) data. Fears of the impact of sanctions on China, Iran, Russia and Turkey did not help and another big drop in U.S. gasoline demand has some worried that U.S. consumers were showing resistance to higher pump prices. The reality is that in August, we do start to see a wind down in gas consumption, and petroleum, in general, is seasonally weak."