Energy Afternoon Highlights Outlook – Payroll gains in February and buying into a weekend with Russia/Ukraine geopolitical risk potential that could impact energy brought the energy complex higher. Energy values mostly settled this week close to values where they left off last week. Geopolitical developments over the weekend will be closely watched by commodity market participants and should influence energy direction early next week. Crude Oil After trading in a $5.00 range, crude oil fell just 1 penny on the week amidst geopolitical uncertainties. Support was felt near $100 yesterday, and the rebound from it kept pace today as WTI settled at $102.58. Russian Foreign Minister Sergei Lavrov called US Secretary of State John Kerry today to warn against sanctions. Russia’s Interfax news agency cited a Russian Foreign Ministry statement that said “Lavrov cautioned against hasty and ill-considered moves that can damage Russian-American relations, especially sanctions, which would inevitably boomerang on the United States.” In February, employers added 175,000 workers, more than the 125,000 expected. The jobless rate rose to 6.7 percent from 6.6 percent. The increase in employment brings confidence that hiring may continue to strengthen in the coming months after winter storms have hindered consumer spending in recent months. German industrial output rose for a third straight month amidst mild winter weather there. Gas flows from Russia to and through Ukraine to Europe remain uninterrupted, according to Gazprom’s press office. The southern portion of the Druzhba pipeline, which pumps oil from Russia, through Ukraine to Europe carried about 300,000 bpd of oil last year. To recap Wednesday’s inventory report, US crude stocks rose 1.4 million barrels last week, Cushing stocks fell 2.7 million barrels and Gulf Coast stocks rose 4.4 million barrels. Baker Hughes said the oil rig count in the US rose 13 to 1,443, the highest since they began reporting figures in 1987. At 4:15pm CT: DJIA closed up 31 points at 16,453, US dollar index fell 0.024 to 79.695, Brent up 72 cents to $108.82. ULSD April ULSD fell less than ½ cent this week. Today, ULSD closed close to its 100-day moving average level of 3.0127 but has since faded to its 200-day moving average at 3.0047. Moves early next week by ULSD should be in reaction to geopolitical developments impacting crude trade. RBOB Gasoline RBOB fell less than ½ cent on the week. Ethanol stocks along the East Coast are extremely tight as rail logistics issues make it difficult to secure cars from the Midwest. Forward cover for ethanol along the East Coast is only about a week. In a normal market, forward cover is about 21 days. Buyers along the East Coast have to pay upwards of $3.50 a gallon for spot ethanol. This adds about 6 cents a gallon to finished E-10. This could limit RBOB gains. Ethanol futures are priced at $2.306, up from near $1.75 in Late January. Natural Gas Natural gas rose a penny on the week. As of January 12, Ukraine had 13.1 billion cubic feet of natural gas in storage. The country needs to import about 30 billion cubic feet a year to meet its needs; much of it from Russia. Propane Propane in Conway and Mont Belvieu were influenced by crude gains and as offers were pulled higher.
Posted on: Sat, 08 Mar 2014 00:21:06 +0000
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