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01-25-2021 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 Monday, January 25, 2021

Date

Crude Oil

Diesel

RBOB

Natural Gas

01/15/2021

$52.36 G21

$1.5929 G21

$1.5284 G21

$2.7370 G21

01/19/2021

$52.98 G21

$1.5987 G21

$1.5381 G21

$2.5460 G21

01/20/2021

$53.24 G21

$1.6004 G21

$1.5439 G21

$2.5390 G21

01/21/2021

$53.13 G21

$1.6006 G21

$1.5479 G21

$2.4910 G21

01/22/2021

$52.27 G21

$1.5760 G21

$1.5487 G21

$2.4460 G21

                                                                                           

In the News:  Energy futures moved into a “consolidation” mode last week and produced little change.   In the spot month Crude Oil was only 9-cents/bbl lower, Gasoline up 2-cents/gal and Diesel down 2-cents/gal.  Weekly DOE inventory data was delayed until Friday, which was part of the reason.  The data showed a 4.4-million-barrel build in Crude Oil stocks, but very little change in Refined Product stocks.  However, the combined total Crude Oil, Gasoline and Distillate stock surplus to last year increased 6.2-million barrels to 63.1-million barrels.  Demand over the most recent four weeks averaged compared to the same period last year showed; Total Petroleum Supplied 18.9-mbpd, down 5.3%; Gasoline 7.8-mbpd, down 9.0%; Distillate 3.5-mbpd. down 0.3%; Jet down 31.7%.  Weekly demand was a bit more bullish with Gasoline up 580,000-bpd to 8.112-mbpd, Distillate up 212,000-bpd to 3.821-mbpd.  Refinery Utilization was a bit bearish after coming in 0.5% higher to 82.5% of capacity.  Compared to the five-year average Crude Oil is up 9%; Gasoline is down 3% to the five-year average and 13.1-million barrels below the same week last year; Distillate is up 8%.  Meanwhile, weekly jobs data also worked to slow the rally.  Initial Jobless Claims came in at 900,000, which was above expectations yet 26,000 fewer than the previous week.  Continuing Claims came in at 5.054 million with the unemployment rate at 3.6%.  Weekly inventory data are summarized below.

DOE Inventory Report Summary - Week Ending -

1/15/2021

   

In millions of barrels

Total Stocks

Change

Production

 

This Week

Last Week

Last Week

Last Year

This Week

Change

Crude Oil

486.6

482.2

4.4

58.5

14.8

0.11

Distillate

163.7

163.2

0.5

17.7

4.5

(0.13)

Gasoline

245.2

245.5

(0.3)

(13.1)

8.9

1.37

       

% Op

82.5%

0.5%

 

Crude Oil Stocks

Distillate Stocks

Gasoline Stocks

 

Change

This Week

Change

This Week

Change

Padd I (East Coast)

11.6

1.4

60.4

(2.0)

68.1

0.0

Padd II (Midwest)

139.7

(4.4)

30.2

1.2

53.3

0.3

Padd III (Gulf)

263.0

5.6

53.8

1.6

82.8

0.0

Padd IV (Rockies)

24.2

(0.1)

4.4

0.2

8.4

0.0

Padd V (West Coast)

48.0

1.8

14.8

(0.6)

32.7

(0.5)

Total

486.5

4.4

163.7

0.5

245.2

(0.3)

Products:   Group and Chicago basis levels were mixed with a bullish bias on Friday.   Group Gasoline ended $0.0025 lower to -$0.0425; Group Diesel ended $0.0100 higher to -$0.0050.  Chicago Gasoline ended $0.0100 higher to -$0.0900; Chicago Diesel settled $0.0250 higher to -$0.0100. 

NYMEX implied Refinery margins ended mixed for the day and the week with strength in Gasoline; weakness in Diesel. The February Gasoline Crack ended $0.77/bbl higher to $12.62/bbl, $0.79/bbl higher for the week; the February Diesel Crack ended $0.16/bbl lower to $14.01/bbl, $0.53/bbl lower for the week.

Overnight:   Energy futures are back on the move higher this morning on the overnight electronic session.  As of 05:00 in the spot months; (Mar) WTI Crude Oil is $0.05 higher to $52.32; (Mar) Brent Crude Oil is $0.27 higher to $55.68; (Feb) Diesel is $0.0024 higher to $1.5784; (Feb) RBOB is $0.0102 higher to $1.5589; (Feb) Natural Gas is up 82 to $2.5280.

Short Term:  On Friday Baker Hughes reported the 9th consecutive increase in Oil Rigs; yet only by 2 to 289, which is 387 fewer than the same time last year.  The whole energy dynamic is changing quickly.  The Biden administration has already killed Keystone and ANWR, brought Iranian oil back onto the market and are well on the way to making the U.S. dependent on foreign oil once again and are now targeting offshore production.  Shale production will be an easy one to kill with mountains of new regulations.  Small refiners will likely be forced out of business over costly regulations and supplies will be tight as a result.   

This market continues to prove how well Maximum Price contracts protect end-users.  The ceiling price is critical to avoid the increases that will come as the global economy returns to normal.  Shortages are expected in Denver this spring with Suncor planning to shut down for 6 to 8 weeks, which will spike local prices (basis).   The downside is inexpensive and will pay back even on dips. 

Natural Gas:  Natural Gas futures ended slightly lower following weekly inventory data.  The EIA reported previous week withdrawal was 187-bcf, which was much more than the same week last year yet near the five-year average.  Total stocks at 3.009-tcf are more than adequate to meet the rest of winter heating demand.  The year-on-year surplus declined to 36-bcf and the surplus to the five-year average declined to 198-bcf from 218-bcf the previous week.  There is also winter weather working west to south-east, which should bring plenty of price support.  Weekly inventory data are summarized below.

Natural Gas

EIA Weekly Inventory

1/15/2021

1/8/2021

Change

Year Ago

5-Year Avg

Region

East

               679

                726

              (47)

                702

                653

Midwest

               828

                879

              (51)

                825

                773

Mountain

               176

                188

              (12)

                154

                156

Pacific

               275

                278

                (3)

                224

                236

South Central

            1,051

             1,126

              (75)

             1,068

                993

Total

            3,009

             3,196

            (187)

             2,973

             2,811

Propane:  The past two weeks have seen extremely volatile price movement in cash propane, yet in opposite directions.  Mid-week prices plummeted after their huge increase led to Asia cancelling several cargos.  Friday ended mixed however on inventory data. Conway ended Friday $0.0200 lower to $0.8350, (20-cents lower for the week); Mt. Belvieu ended $0.0200 higher to $0.8700, (10-cents lower for the week).  Weekly DOE inventory showed a huge 6.2-million-barrel stock draw, three times what was expected.  It was due to high domestic demand and higher exports, though exports are expected to tail off in February.  Exports were up 133,000-bpd from the previous week to 1.480-mbpd, (257,000-bpd more than this time last year).  Production was down 45,000-bpd to the previous week at 2.295-mbpd, (62,000-bpd less than last year).  Weekly demand was down 225,000-bpd to the previous week, yet 417,000-bpd higher than the same week last year.  The year-on-year deficit increased to 20.8-million barrels and stocks are 11% below the five-year average.  Weekly inventory data are summarized below.

EIA Weekly Propane Inventory

1/15/2021

1/8/2021

Change

Year Ago

Change

Padd I (East Coast)

6.3

7.5

(1.2)

6.1

0.2

Padd II (Midwest)

16.7

18.7

(1.9)

18.5

(1.8)

Padd III (Gulf)

31.9

35.0

(3.1)

52.9

(21.0)

Padd IV & V (Rockies)

4.8

4.9

(0.1)

3.1

1.7

Total

59.8

66.0

(6.2)

80.6

(20.8)

Demand (mbpd)

1.879

2.104

(0.225)

1.462

0.417

“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."

                                                                                         

 

 

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