Month: July 2015

Sales of transport fuels have exceeded all expectations this year, making demand from reviving economies the mantra of bulls who say the oil price is well on the mend. But warning signs, especially in Europe, may derail that view. Growing stocks, and early stress signals for some oil products, such as diesel, are throwing a cautionary signal to those who believe the shale oil-driven glut in physical crude markets will be absorbed by demand alone. Gasoline consumption has bounced far higher, with U.S. drivers joining those in India, Indonesia and China in driving more often, and in some cases in less fuel efficient cars. Diesel for goods-laden trucks and jet fuel has also been in higher demand. The consumption strength across products led the International Energy Agency (IEA) to revise its demand forecast higher several times, with a current estimate of 1.4 million barrels per day, or 1.5 percent, […]

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July 1 (Reuters) – U.S. crude oil futures’ discount to Brent, one of the biggest plays in oil, widened to more than $5 a barrel for the first time in three weeks on Wednesday after U.S. government data showed a surprise inventory build. Crude stockpiles in the United States rose 2.4 million barrels last week, the first weekly rise since April, after analysts in a Reuters poll had forecast a 2 million-barrel draw. Inventories at the Cushing, Oklahoma delivery point for U.S. futures, also known as West Texas Intermediate (WTI), rose 123,000 barrels, another unexpected build. "The bottom line is the overall U.S. stock build is weighing on heavily on WTI, and the Cushing build is adding to that," said Tariq Zahir, an oil trader and managing member at Tyche Capital Advisors in Laurel Hollow, New York. One of the most popular trades betting on the volatile fluctuations between […]

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NEW YORK Speculators are piling into complex crude options this week, in a bet the market is going to tumble later this year on an expected slowdown in refinery demand and robust oil inventory levels. Some 8,200 lots of bearish calendar-spread options were executed on Tuesday over the remainder of the third quarter, the fourth quarter and into the first quarter of 2016 in the over the counter market, according to CME Group’s daily bulletin on Wednesday. The contracts can go days without a single trade, so the rush was unusual. Those trades included puts, put spreads and fences, dealers say, with strike prices at negative 50 and negative 75 cents. Five hundred puts also traded at a negative $3.00 strike price for the August/September and September/October contracts. Since the end of April, the front to second month spread has strengthened by nearly 80 percent. On Wednesday, the spread […]

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LONDON Benchmark crude oil prices have barely moved for more than two months, implying the market has found a temporary equilibrium after the enormous price shock in the second half of 2014 and early 2015. Over the last 30 trading days, the range between the highest and lowest closing prices for front-month Brent futures has been just $4.50 per barrel. The highest close for the front-month futures contract was at $66.54 per barrel (May 21) and the lowest was $62.01 (June 29). The trading range is the smallest since the shock began in June 2014, and down from a peak of almost $40 per barrel in early January 2015. In dollars per barrel, the range has been narrow by the standard of the last decade ( link.reuters.com/cew94w ). Even in percentage terms, which allow for differences in outright prices, the market has been quiet ( link.reuters.com/few94w ). The trading […]

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LONDON Massive downward revisions to oil output in Brazil and Iraq have increased the risks for oil markets of going from the current feast to famine within just a few years, leading to a price spike that would give a new boost to the U.S. shale industry. Brazil and Iraq had been expected to add over 2 million barrels per day to global supply by 2020 and another 2.5 million by 2025, becoming the two biggest contributors to help meet rising global demand, according to the long-term forecast of the International Energy Agency. With Brazil’s Petrobras cutting this week its five-year production outlook by 1.4 million bpd in response to low oil prices and the ongoing corruption probe and Iraq renegotiating deals with oil majors to reflect "more realistic" output targets, the current glut in the oil markets is poised to end sooner than expected. "All these project cancellations […]

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By Timothy Puko Natural gas sank Wednesday after weather models showed a growing consensus in favor of unseasonably cool weather on the way, a likely precursor to soft demand. Prices for the front-month August contract settled down 4.9 cents, or 1.7%, to $2.783 a million British thermal units on the New York Mercantile Exchange. Prices are still locked in the 17-cent range in which they have settled for the past three weeks. Prices had surged Tuesday afternoon, reversing losses, after the most widely watched U.S. government forecast showed a trough of cool air hitting farther east than originally expected, creating hotter forecasts. But that model’s Wednesday morning update brought it more in line with other models that suggest cooler weather. "Whoever bought it yesterday, bought it right at the high point," said Santiago Diaz, a broker at INTL FCStone Latin America in Miami. Without hot weather to drive demand […]

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