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10-18-2021 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 Monday, October 18, 2021

Date

Crude Oil

Diesel

RBOB

Natural Gas

10/11/2021

$80.52 X21

$2.5150 X21

$2.3779 X21

$5.3450 X21

10/12/2021

$80.64 X21

$2.5100 X21

$2.3829 X21

$5.5050 X21

10/13/2021

$80.44 X21

$2.5211 X21

$2.4055 X21

$5.5590 X21

10/14/2021

$81.31 X21

$2.5614 X21

$2.4350 X21

$5.6870 X21

10/15/2021

$82.28 X21

$2.5737 X21

$2.4864 X21

$5.4100 X21

In the News: The energy complex chalked up another bullish week that saw (in the spot months) Crude Oil move $2.93/bbl higher; Gasoline move 12-cents higher; Diesel gain 10-cents. Most of the gains came on bullish global demand growth predictions evens as U.S. fundamentals were mixed, bullish and bearish. Crude Oil stocks posted an increase of 6.1 million barrels as Refinery Utilization dropped a (significant) 2.9% to 86.7% of capacity. Compared to the five-year average Crude Oil stocks are 6% below; Gasoline stocks are 2% below and Distillate stocks are 9% below. The drop in Refinery Utilization would indicate Refined Product deficits won’t be made up anytime soon.   U.S. President Biden killed the Keystone pipeline and banned all drilling on federal lands and halted several other deals that would have kept the U.S. energy independent when he first came into office. Then, last week, he went to OPEC and asked they increase production to help alleviate global shortages in the U.S., China, and Europe. Basically, when they got done laughing, they simply said “no”. Russia clarified a bit when they basically said when Crude Oil hits $100/bbl come ask again.  

Products: Basis movement showed end-of-week volatility especially in Chicago. Group Gasoline basis moved $0.0025 higher to -$0.1000; Group Diesel basis ended $0.0100 lower to -$0.0550. Chicago Gasoline basis ended $0.0450 lower to -$0.1000; Chicago Diesel ended $0.0300 lower to -$0.0900.

Trading in line with inventory data for a second session, Refined Products out-gained Crude Oil, resulting in higher NYMEX implied Refinery Margins. The November Gasoline Crack ended $1.19/bbl higher to $22.15, $2.12/bbl higher for the week; November Diesel Crack ended $0.45/bbl lower to $25.82/bbl, yet $1.27/bbl higher for the week.

Overnight: Energy prices are sharply higher this morning on the overnight electronic session. As of 05:00 in the spot months; (Nov) WTI Crude Oil is $1.32 higher to $83.60; (Dec) Brent Crude Oil is $0.94 higher to $85.80; (Nov) Diesel is $0.0248 higher to $2.5985; (Nov) RBOB is $0.0179 higher to $2.5043; (Nov) Natural Gas is off 109 to $5.3010.

Short Term: Baker Hughes reported on Friday that the U.S. Oil Rig count increased by 12 to 445, which is 240 more than this time last year. Since Hurricane Ida, when this latest “bull run” started, the Rig Count has increased 51. Yet the EIA said U.S. Crude Oil output will drop 260,000-bpd to 11.02-mbpd this year as Biden restricts drilling activity.   The Canadian Oil Rig count increased by 3 to 98, 58 more than last year. OPEC + has stated they will not deviate from their plan to add 400,000-bpd each month through December.   The group had a good collective laugh at President Biden when he asked them to accelerate production increases to ease global supply issues and bring the price back down.   When has OPEC ever been interested in bringing the price back down? Early trade today looks like the bullish trend will hold despite a stronger U.S. dollar and call for a lower open in the equity markets. Friday trade showed little end-of-week profit taking, which is a very bullish indicator. 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 pulled back on Friday with good old fashioned end-of-week profit taking and on bearish U.S. fundamentals. On Thursday the EIA said previous week injection was 83-bcf, which was above the same week last year and above the five-year average. Total stocks of 3.371-tcf are 499-bcf below the same time last year. The deficit to the five-year average moved from 176-bcf the previous week to 172-bcf in this report.

Propane: Cash Propane prices continue higher on bullish inventory data.  Conway ended $0.0300 higher to $1.4950; Mt Belvieu ended $0.0250 higher to $1.4850. Weekly inventory data showed Production was down 37,000-bpd to 2.313-mbpd while Exports increased 120,000-bpd to 1.370-mbpd. It’s an easy math calculation to see that isn’t going to bode well for supplies going forward. It’s also part of why Propane stocks decreased 600,000 barrels instead of increasing the estimated 800,000 barrels. The Midwest posted its first draw of the season on strong agricultural and early heating demand. The USGC stocks increased to the prior week but not by a significant amount when the deficit is over 26 million barrels. Total stocks are 21% below the five-year average. Demand was 165,000-bpd lower than the previous week et slightly higher than 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."

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