PREVIEW: Oil Futures DN, Products Slide after Testing Highs
CRANBURY, N.J. (DTN) -- Nearest delivered oil futures traded on the New York
Mercantile Exchange and Brent crude on the Intercontinental Exchange moved
lower overnight following Friday's advance, with the RBOB and ULSD contracts
reversing lower after testing last week's multi-month highs at $2.0987 and
$2.1285 gallon, respectively.
"Oil is pulling back a bit today on reports by private forecasters of a
build in Cushing Oklahoma supply," said Chicago-based Phil Flynn, senior market
analyst with the Price Futures Group.
The Energy Information Administration last week reported Cushing oil
inventory was drawn down 1.1 million bbl during the week-ended April 13 to 34.9
million bbl, which was the first draw since early March. Stock changes at
Cushing are closely watched since it serves as the delivery location for NYMEX
West Texas Intermediate futures.
NYMEX June WTI futures are nearest to delivery following the May contract's
expiration Friday (4/20) afternoon. A strengthening U.S. dollar, trading at a
more than seven-week high this morning, is also weighing on WTI futures.
While pulling back amid overbought technical pressure, WTI and Brent futures
remain in backwardation, a bullish market structure.
"Geopolitical risks abound as well. The big May 12 decision by the Trump
Administration to decide whether it will leave a nuclear deal with Iran and hit
them with more sanctions. Yet, we also have Syria and Yemen that is on the back
burner as well as heightening tensions between Israel and Iran," said Flynn.
U.S. President Donald Trump will meet with French President Emmanuel Macron
on Tuesday and German Chancellor Angela Merkel on Friday, when it's expected
Europe's two leaders will attempt to persuade Trump to keep the United States
in the Iranian nuclear accord reached in 2015 during the Obama administration.
Trump set a May 12 deadline for major changes to be made to the accord,
including a greater scope for international inspections of Iran's nuclear
facilities, Iran's ballistic missiles program, and the timeline allowing Tehran
to resume its nuclear program. Absent these changes, Trump said he would
withdraw from the accord, which would re-impose sanctions on Iran. Analysts'
estimate sanctions could cut Iranian crude exports, currently at about 3.8
million bpd, by 350,000 bpd.
The White House meetings with the heads of state follows an attack earlier
this month by the Syrian regime using chemicals weapons against a rebel enclave
that also targeted civilians in the country's seven-year civil war. U.S.,
French, and British military forces responded with missile strikes that
destroyed three facilities tied to Syria's chemical weapons activities. Iran
and Russia are allies of Syrian President Bashar Assad.
Futures at 8:00 AM ET
NYMEX Contract Last Change High Low
WTI June $68.23 -$0.17 $68.45 $67.84
WTI July $68.09 -$0.09 $68.28 $67.69
ULSD May $2.1218 -$0.0012 $2.1263 $2.1078
ULSD June $2.1136 -$0.0017 $2.1180 $2.0994
RBOB May $2.0950 -$0.0009 $2.0955 $2.0811
RBOB June $2.0982 -$0.0016 $2.0996 $2.0852
Brent June $74.10 $0.04 $74.15 $73.50
Brent July $73.39 $0.04 $73.45 $72.81
SPOT PRODUCT MARKETS
Spot market oil product prices closed a lightly traded Friday session higher
east of the Rockies, and logged-in mixed results on the U.S. West Coast.
Gulf Coast 7.8-lb. RBOB posted a 2.35cts advance improving 50pts to a 3.5cts
basis discount, and 9.0-lb. RBOB in New York Harbor ramped up 2.0cts trading at
a penny May futures discount to prompt barge. Summer quality CBOB in Group 3
climbed 2.1cts, and 9.0-lb. Chicago suboctane posted a 1.6cts gain indexed
8.0cts below the May RBOB futures print.
San Francisco regular CARBOB eased a fraction on a 200pts decline in basis,
and moved 0.85cts above its Thursday DTN posting in Los Angeles rated at a
16.5cts MERC premium. Suboctane regular basis in Portland held steady at a
17.0cts futures premium that boosted flat price by 1.85cts to $2.2659 gallon.
Open market ULSD in Chicago edged 0.99cts higher, easing 25pts in cash
differential in trading at a 3.75cts futures discount, while the remainder of
east of the Rockies diesel fuel values maintained close parity with the $2.1230
gallon May ULSD futures closing price.
Prompt ULSD in Portland toppled 450pts in basis and 3.14cts in spot price,
rated at a 19.0cts May futures premium, and CARB ULSD in the Bay rode the
1.36cts futures bounce higher, rated at a 6.0cts MERC premium. CARB ULSD in Los
Angeles climbed 1.35cts higher, tagged 8.5cts over the June ULSD futures print
at $2.2002 gallon.
NEW YORK HARBOR GULF COAST
Heating Oil $2.0593 Heating Oil $1.9431
ULS Heating Oil $2.0893 ULS Heating Oil $2.0368
ULSD $2.1293 ULSD $2.0768
Jet, 54-grade $2.1593 Jet, 54-grade $2.0586
Conventional Regular $2.0725 Conventional Regular $2.0275
RBOB $2.0850 Conventional Premium $2.1575
PBOB $2.2175 RBOB $2.0600
CBOB Regular $2.0050 PBOB $2.2110
CBOB Premium $2.1850 CBOB Regular $2.0175
CBOB Regular 7.8 $2.0400 CBOB Premium $2.2050
CBOB Premium 7.8 $2.2225 A2 CBOB $1.9650
D2 CBOB $2.1525
Jet $2.0843 CHICAGO
Suboctane Gasoline $1.9675 ULSD $2.0831
Conventional Premium $2.1725 Jet $2.1118
CBOB Regular $2.0125
LOS ANGELES Conventional Premium $2.2775
ULSD $2.1986 RBOB $2.1225
CARB ULSD $2.1986 PBOB $2.3125
Conventional Regular $2.2550
Conventional Premium $2.4150 PORTLAND
CARBOB Regular $2.2600 ULSD $2.3118
CARBOB Premium $2.4150 Jet $2.1843
Suboctane Gasoline $2.2650
SAN FRANCISCO Conventional Premium $2.6200
CARB ULSD $2.1818
Conventional Regular $2.1900
Conventional Premium $2.4800
CARBOB Regular $2.2200
CARBOB Premium $2.4800
Brian L. Milne, 1.609.371.3328, firstname.lastname@example.org, www.dtn.com. (c) 2018
DTN. All rights reserved.