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09-16-2021 Daily Market Comments

6301 Ralston Road – Arvada, CO 80002

Bryant Gimlin, Energy Risk Manager ~ Office: (303) 350-3757 Cell: (970) 590-8782

Daily Market Comments for: For Thursday, September 16, 2021

Date

Crude Oil

Diesel

RBOB

Natural Gas

09/09/2021

$68.14 V21

$2.1137 V21

$2.0997 V21

$5.0310 V21

09/10/2021

$69.72 V21

$2.1460 V21

$2.1540 V21

$4.9380 V21

09/13/2021

$70.45 V21

$2.1583 V21

$2.1609 V21

$5.2310 V21

09/14/2021

$70.46 V21

$2.1613 V21

$2.1724 V21

$5.2600 V21

09/15/2021

$72.61 V21

$2.2053 V21

$2.2066 V21

$5.4600 V21

In the News: Crude Oil and Refined Products rallied to the highest levels since late July on the heels of bullish fundamental data. The DOE reported across-the-board stock draws, about as expected for Refined Products yet three-times as much for Crude Oil at 6.5 million barrels. Current stocks levels compared to the five-year average show Crude Oil down 7%; Gasoline down 4% and Distillate down 13%. The Bureau of Safety and Environmental Enforcement is reporting 29.52% or 537,193-bpd of oil production remains offline in the Gulf of Mexico following Hurricane Ida a little over two weeks ago.   Valero reported they are restarting the 125,000-bpd Meraux and the 340,000-bpd St. Charles refineries, however. The combined Crude Oil, Gasoline and Distillate deficit to last year increased 8.8 million barrels to 139.4 million barrels. Refinery Utilization was expected to increase 2.7% but was only 0.2% higher at 82.1% of capacity.   The demand side remains bullish as over the four most recent weeks averaged compared to the same period last year; Total Petroleum Supplied was 21.1-mbpd, up 16.9%; Gasoline was 9.4-mbpd, up 8.1%; Distillate was 4.0-mbpd, up 10.9%; Jet was up 59.1%. Weekly demand showed Gasoline down 716,000-bpd to 8.892-mbpd; Distillate up 1110,000-bpd to 3.795-mbpd. On the economic side, Industrial Production was up 0.4% despite the effects of Hurricane Ida. It’s a positive economic indicator, which is also bullish to Crude Oil. Weekly inventory data are summarized below.

DOE Inventory Report Summary - Week Ending -

9/10/2021

   

In millions of barrels

Total Stocks

Change

Production

 

This Week

Last Week

Last Week

Last Year

This Week

Change

Crude Oil

417.4

423.9

(6.5)

(78.6)

14.4

0.09

Distillate

131.9

133.6

(1.7)

(47.4)

4.2

(0.03)

Gasoline

218.1

220.0

(1.9)

(13.4)

9.3

(0.85)

       

% Op

82.1%

0.2%

 

Crude Oil Stocks

Distillate Stocks

Gasoline Stocks

 

Change

This Week

Change

This Week

Change

Padd I (East Coast)

8.1

(0.2)

42.7

0.9

53.8

(0.4)

Padd II (Midwest)

113.9

(3.3)

32.2

0.7

46.8

(0.1)

Padd III (Gulf)

224.2

(3.8)

40.6

(4.1)

80.0

(1.8)

Padd IV (Rockies)

23.4

(0.1)

3.6

0.2

6.8

(0.1)

Padd V (West Coast)

47.9

1.0

12.8

0.6

30.8

0.5

Total

417.4

(6.5)

131.9

(1.7)

218.1

(1.9)

Products: Not a lot of change in Group and Chicago basis levels, which means the NYMEX price increased were passed through to the physical markets. Group Gasoline basis moved $0.0050 lower to -$0.0150; Group Diesel basis was unchanged at +$0.0225. Chicago Gasoline basis ended $0.0100 lower to +$0.0550; Chicago Diesel ended $0.0075 higher to +$0.0300.

Despite sharply higher Refined Product prices NYMEX implied Refinery Margins lower because the Crude Oil rally was even larger. The October Gasoline Crack ended $0.71/bbl lower to $20.07/bbl; October Diesel Crack ended $0.30/bbl lower to $20.01/bbl.

Overnight: Energy futures are correcting lower this morning on the overnight electronic session following yesterday’s explosive rally. As of 07:00 in the spot months; (Oct) WTI Crude Oil is $0.76 lower to $72.18; (Nov) Brent Crude Oil is $0.49 lower to $74.97; (Oct) Diesel is $0.0118 lower to $2.1935; (Oct) RBOB is $0.0115 lower to $2.1951; (Oct) Natural Gas is off 33 to $5.4270.

Short Term: Early trade is a technical correction to an over-done rally on Wednesday. Yesterday also showed improvements in production and refining that had been shuttered in the Gulf of Mexico because of Hurricane Ida further delayed by Tropical Storm Nicholas, which actually hit as a category 1 hurricane. An increase in weekly jobless claims is also providing some downward influence. As operations improve some of the bearish factors such as COVID impacts on the economy and higher OPEC + production should take hold. Yet global demand is likely to provide long-term price support. This is exactly why end-users should stay covered with Maximum Price contracts. It provides a ceiling price that protects against higher prices and downside protection should prices decline.

Natural Gas: Futures rallied to the highest level since February 2014 on very bullish fundamentals. The Bureau of Safety and Environmental Enforcement reported 39.4% of Gulf of Mexico production remains offline, which is much improved yet still very significant. The DOE reported 299.9-bcf was exported by ship in July, 10.9% higher than the previous month. Going into today’s weekly report total stocks are at 2.923-tcf, 592-bcf below last year and 235-bcf below the five-year average.

Propane: Cash Propane prices soared to new highs following bullish inventory data. Conway ended $0.0550 higher $1.3100; Mt Belvieu ended $0.0525 higher to $1.3025. The EIA said Propane stocks increased (just) 0.7 million barrels, which is not enough to overcome current shortfalls. Production edged 77,000-bpd lower to 2.217-mbpd, yet Exports were 112,000-bpd lower to 1.300-mbpd. Weekly demand was 27,000-bpd higher than the previous week yet 590,00-bpd below the same week last year. Perhaps early summer-fill amid rising prices will offer some inventory relief in the weeks to come, but for now it is bullish. Weekly inventory data are summarized below.

EIA Weekly Propane Inventory

9/10/2021

9/3/2021

Change

Year Ago

Change

Padd I (East Coast)

8.5

8.6

(0.1)

8.6

(0.1)

Padd II (Midwest)

24.0

23.1

0.9

27.3

(3.3)

Padd III (Gulf)

33.2

33.5

(0.3)

54.9

(21.7)

Padd IV & V (Rockies)

5.1

4.9

0.2

5.3

(0.2)

Total

70.8

70.1

0.7

96.1

(25.3)

Demand (mbpd)

0.888

0.861

0.027

1.478

(0.590)

“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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