Weekly Insights - April 13, 2018

So far, this week has been a wild ride. Not surprisingly, the tail end of last week saw some weakness in the markets. Monday and Tuesday of this week, the bulls took control bringing crude up over $2 and refined products up 9-10 cents in two days. Below is a short excerpt from CHS’s Tuesday market report:
“At its peak today the RBOB contract was just 3 points shy of its high point so far this calendar year of $2.0463 set back on March 26th.   Fears over a trade war seem to have subsided for now which lifted equity markets as well as oil futures.  Equities and energy seem to be connected over the past couple months and have moved generally in the same direction.  Concern over “new” tensions in the Middle East since this weekend have also renewed some interest in oil length as well.
A report out from the EIA today also helped fuel the fire from a refined products standpoint as well.  The EIA is forecasting summer 2018 (Apr-Sept) gasoline demand to average 9.56 million bpd which is up 20,000 bpd from last year’s record average.  As of April 1st total gasoline inventories stood 1.1 million bbls below last year’s levels but still 5.4 million above the 5 year average.  On the diesel side the EIA is predicting summer consumption to average 4.0 million bpd which would be 100,000 bpd higher than last year’s average and if comes to fruition would be the highest summer demand since 2007.  Distillate inventories began April 21.9 million bbls below year ago levels and 5.5 million below the 5-year average.”
With that information to ponder over, it will be interesting to see how the markets react the rest of the week.
Wednesday:  The markets are again making a run of 2 ½ - 3 cents. The EIA inventory showed WTI and RBOB up but Distillates down 1MMB. This coupled with the threat of military action in Syria are apparently what is driving the market. John Wenzel from FC Stone comments, “There is no threat to oil production or supply from the threat in Syria, and I expect as sharp of a pullback as there is currently an upside in prices when the dust settles.”
Thursday: The markets are showing some downside this morning, albeit only about a penny. Could this be just a “breather” before another run? More news from the middle east. Yemen shot missiles into Saudi Arabia. Although they were shut down, it just adds unrest to the market.
 
As I was doing price sheets this morning it jumped out at me that diesel prices were .20 higher than a month ago, .15 of that this week. I do believe there will be a pullback in the market when the current Middle East stories leave the front page of the news, but will they drop as much as they went up? Good question.
 
If you should need anything feel free to email me or call myself, the main office or Myron. And once again thanks for your patronage.
                    Brian

 
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