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03-05-2021 Daily Market Comments

6301 Ralston Road – Arvada, CO 80002

Bryant Gimlin, Energy Risk Manager ~ Office: (303) 350-3757 Cell: (970) 590

Daily Market Comments for: For Friday, March 05, 2021

 

                                                                                         

Date

Crude Oil

Diesel

RBOB

Natural Gas

02/26/2021

$61.50 J21

$1.8565 H21

$1.8770 H21

$2.7710 J21

03/01/2021

$60.64 J21

$1.8192 J21

$1.9429 J21

$2.7770 J21

03/02/2021

$59.75 J21

$1.8081 J21

$1.9364 J21

$2.8390 J21

03/03/2021

$61.28 J21

$1.8357 J21

$1.9518 J21

$2.8160 J21

03/04/2021

$63.83 J21

$1.8960 J21

$1.9979 J21

$2.7460 J21

                                                                                           

In the News: Energy futures moved sharply higher despite a slow start on the day. Early trade consisted of traders sitting the sidelines as they awaited results from the OPEC + meeting to discuss production strategy going forward. That decision turned out to be bullish as they will essentially roll the current 7.2-mbpd cut forward and Saudi Arabia will stay with their voluntary 1.0-mbpd additional production cut. The only cavate is Russia and Kazakhstan receiving special consideration to boost output by a combined 150,000-bpd in April after a 75,000-bpd in February and March due to “local” demand. Basically, the message was let the U.S. work off its current inventory surplus and then come running to OPEC for supply as President Biden cripples U.S. production. By then the U.S. will be paying significantly higher prices and the profits will all go the OPEC + members. But they will have to be patient as the U.S. refining must return to use the Crude Oil. Last week Refinery Utilization was (only) 56.0% of capacity. That’s very bullish to Refined Products because inventory should be building this time of year to meet spring and summer demand. Meanwhile, U.S. initial unemployment claims came in near expectations at 745,000.

Products: Perhaps the “short squeeze” has peaked in the Group Diesel as basis pulled back a bit after huge gains the past four sessions. The Gulf arbitrage has opened to more than 30-cents, making it too tempting not to ship into the group despite tight supplies at the Gulf. Group Gasoline ended $0.0025 lower to -$0.0225; Group Diesel ended $0.0400 lower o +$0.2400; Chicago Gasoline basis ended $0.0325 lower to -$0.1600; Chicago Diesel ended $0.0100 lower to +$0.0650. There has been no improvement in Denver Diesel supply, in fact it is getting worse on lack of Group barrels able to come in. Two refineries remain down, on in El Dorado, AR and one in Tulsa, OK remain down. Suncor’s Commerce City Refinery turnaround has been delayed (tentatively) to April 19th.but with this shortage it is very unlikely any stockpiling will occur prior to the downtime. Going to be a long spring/summer. could be as bad or even worse than Hurricane Katrina. The good news is that with higher basis Group shippers should start again after getting beat up hard in January.

NYMEX implied Refinery margins ended lower as Crude Oil continues to post the largest rally. The April Gasoline Crack ended $0.61/bbl lower to $20.08/bbl; the April Diesel Crack ended $0.02/bbl lower to $15.80/bbl.

Overnight:  Yesterday’s huge rally is extended this morning on the overnight electronic session. As of 06:50 in the spot months; (Apr) WTI Crude Oil is $1.72 higher to $65.55; (May) Brent Crude Oil is $2.07 higher to $68.81; (Apr) Diesel is $0.0383 higher to $1.9343; (Apr) RBOB is $0.0450 higher to $20429; (Apr) Natural Gas is off 14 to $2.7320.

Short Term: The market price surge continues today off of the OPEC+ group extending their current production cuts into April; except for Russia being allowed to increase production by .130 mill bpd and Kazakhstan an increase of .020 mill bpd.  Going into the meeting most traders were expecting the OPEC+ group to increase production by .500 mill bpd.  The bigger news was that Saudi Arabia announced that it would continue its voluntary production cut of 1.0 mill bpd through April and Saudi Arabia said it was in no hurry to bring back its 1.0 mill bpd cut and would decide when to do that in coming “months.” OPEC+ also extended the date for previous over-producers to compensate for cheating through the end of April. Saudi Arabia says oil prices could hit $70 / bbl by the end of April. Goldman Sachs raised its Brent crude price forecast up to $75 / bbl in Q2 2021 and to $80 / bbl in Q3 2021. Brent is well on the way currently trading near $69.00/bbl and on the way to $70.00. That clears the way for $70.00 WTI. RBOB (Gasoline) has blown through technical resistance of $2.000 and Diesel isn’t far behind. OPEC is just licking their chops knowing that Biden has made the U.S. reliant on OPEC oil and OPEC is already exercising their renewed ability to control prices. The $70.00/bbl is likely just a pitstop on much higher prices in the future.

Natural Gas: Futures ended lower as weekly inventory data failed to provide as much support as anticipated. The EIA said previous week withdrawal was 98-bcf, which was slightly more than the five-year average, but less than the same week last year. The year-on-year deficit was reduced to 277-bcf from 298-bcf the previous week. The deficit to the five-year average increased slightly to 178-bcf from 161-bcf the previous week. Weekly inventory data are summarized below.

Natural Gas

EIA Weekly Inventory

2/26/2021

2/19/2021

Change

Year Ago

5-Year Avg

Region

East

               383

               424

             (41)

               460

               415

Midwest

               465

               508

             (43)

               567

               507

Mountain

               117

               123

               (6)

               103

               113

Pacific

               210

               218

               (8)

               197

               191

South Central

               670

               670

               -  

               795

               796

Total

           1,845

             1,943

             (98)

             2,122

             2,023

Propane: Some of the volatility is coming out of cash Propane pricing as the polar vortex is over and the season is essentially in its last month. Yesterday Conway ended $0.0200 higher to $0.8900; Mt. Belvieu ended $0.0050 higher to $0.9750. Weekly inventory data showed a 2.3-million-barrel inventory draw, but the year-on-year surplus improved to 23.4 million barrels form 24.6 million barrels the previous week. Production improved 365,000-bpd to 1.730-mbpd, yet still way below normal. Exports declined 574,000-bpd to 0.713-mbpd due to export ports being closed during the “polar vortex” storm.   Weekly demand was up huge; 951,000-bpd to 1.487-mbpd, yet 297,000-bpd below the same week last year.

“The risk of loss trading futures can be substantial. Each investor must consider whether this is a suitable investment. This report is for informational purposes only and is not to be construed as an offer to sell or a solicitation to buy the commodities or securities herein named. The information in this report has been obtained from sources believed to be reliable but is not necessarily all-inclusive and is not guaranteed as to its accuracy. Unless otherwise stated any quotes provided by Hill Petroleum does not include commissions or bid/ask spreads. Any opinions expressed in this report are those of the author. Individual employees of Hill Petroleum may express different or contrary opinions. The above recommendations may or may not be followed by Hill Petroleum or its 0employeefs."

 

 

 

Last Updated on Friday, 05 March 2021 07:19

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