PREVIEW: Oil Futures Slide on Renewed Worries over Growth
1/17 7:42 AM
PREVIEW: Oil Futures Slide on Renewed Worries over Growth CRANBURY, N.J. (DTN) -- New York Mercantile Exchange oil futures nearest delivery and Intercontinental Exchange Brent futures moved lower in overnight trading following two up days amid renewed concern over global economic growth following weakness in Europe and China. Earlier this week, stimulus efforts announced by Beijing to boost an economic slowdown rallied oil futures and equities, with dovish comments by European Central Bank President Mario Draghi that accommodative monetary policies would need to continue also lending upside support. The pullback in oil futures also follows Wednesday's release of weekly supply data by the Energy Information Administration showing U.S. crude production reached a fresh record of 11.9 million bpd last week, up 200,000 bpd from the prior week, while oil products supply again increased. Oil traders are so far looking past a plunge in crude production by the Organization of the Petroleum Exporting Countries, which dropped 751,000 bpd from November to December to a three-year, three-month low of 31.578 million bpd. Part of the steep decline was the omission of Qatar output rates, with the Persian Gulf country withdrawing from the cartel on Jan. 1. In November, Qatar output was 615,000 bpd, according to OPEC's December Monthly Oil Market Report. Still, crude production by Saudi Arabia dropped 468,000 bpd from a record high of 11.021 million bpd to a 10.553 million bpd three-month low in December, in alignment with comments from Saudi officials last month as they were negotiating a renewed agreement extending production cuts into this year. Libyan crude production fell 172,000 bpd to a four-month low at 928,000 bpd in December, as militant activity in the North African nation hobbled oil flow activity. Iran's crude production tumbled 159,000 bpd to 2.769 million bpd in December, the lowest output rate since September 2015. The steep drop follows the early November effective date for U.S. sanctions on Iranian oil exports. Iran was also under U.S. sanctions from 2012 to 2015. In its monthly outlook, OPEC revised down its outlook for non-OPEC supply in 2019 by 60,000 bpd to 64.16 million bpd that represents annualized growth of 2.1 million bpd. "This was mainly due to a downward revision in Canada's supply forecast," said OPEC. The province of Alberta mandated 350,000 bpd in production cuts during the first quarter in an effort to clear inventory and narrow a steep discount Canadian crude was sold at against the global benchmark. OPEC projects Canadian production to fall 50,000 bpd in 2019, with liquids supply seen averaging 5.11 million bpd. OPEC maintained its outlook world oil consumption this year would increase 1.29 million bpd to 100.08 million bpd, with the annualized growth rate slowing from the 2018 estimated 1.5 million bpd increase. FUTURES at 8:00 AM ET NYMEX Contract Last Change High Low WTI Feb. $51.13 -$1.18 $52.36 $51.13 WTI March $51.43 -$1.19 $52.65 $51.41 ULSD Feb. $1.8646 -$0.0300 $1.8921 $1.8642 ULSD March $1.8577 -$0.0308 $1.8862 $1.8573 RBOB Feb. $1.3842 -$0.0314 $1.4155 $1.3842 RBOB March $1.4015 -$0.0316 $1.4326 $1.4012 ICE Brent March $60.20 -$1.12 $61.17 $60.19 Brent April $60.22 -$1.12 $61.15 $60.20 SPOT PRODUCT MARKETS Spot market oil product prices rallied Wednesday east of the Rockies, and posted mixed results on the West Coast, where a third consecutive week of PADD 5 gasoline stock increases pressured motor fuel prices. Regular CARBOB in Los Angeles fell 1.55cts rated at a 20.0cts MERC premium, and maintained a 14.5cts futures premium in San Francisco. Portland suboctane regular eased 0.55cts, indexed 2.5cts over the February RBOB futures print. Gulf Coast conventional regular no lead gained 40pts in cash differential and 0.85cts trading at a 2.45cts futures discount, and edged 0.35cts higher in New York Harbor, tagged at a 2.75cts futures premium for offline supply. Chicago 15.0-lb. CBOB soared 5.5cts in basis and 5.95cts in flat price, trading at a 10.0cts MERC discount for delivery into the Buckeye Complex, and V-grade 13.5psi RVP suboctane in Group 3 posted a 1.70cts advance on a prompt deal closed at a 7.5cts February futures discount. L.A. CARB ULSD gained a penny in cash differential and 3.24cts in spot price to $1.8446 gallon, rated at a 5.0cts futures discount, and Bay diesel climbed 1.74cts to $1.7996 gallon. Portland ULSD rallied 2.49cts to $1.8321 gallon. Gulf Coast 62-grade ULSD sold at a 7.10cts futures discount that boosted spot price 3.64cts to $1.8236 gallon, and tracked the futures rally up 2.24cts to $1.8896 gallon in New York Harbor. Chicago and Group 3 ULSD cash differentials were unchanged, with spot prices matching the 2.24cts advance in futures. NEW YORK HARBOR GULF COAST Heating Oil $1.8218 Heating Oil $1.6668 ULS Heating Oil $1.8318 ULS Heating Oil $1.7658 ULSD $1.8593 ULSD $1.7933 Jet, 54-grade $1.9418 Jet, 54-grade $1.7868 Conventional Regular $1.4117 Conventional Regular $1.3597 RBOB $1.3782 Conventional Premium $1.4997 PBOB $1.5142 RBOB $1.3492 CBOB Regular $1.3767 PBOB $1.4902 CBOB Premium $1.5492 CBOB Regular $1.3327 CBOB Premium $1.4787 GROUP 3 ULSD $1.7643 CHICAGO Jet $1.8043 ULSD $1.6243 Suboctane Gasoline $1.3092 Jet $1.6643 Conventional Premium $1.4692 CBOB Regular $1.2842 Conventional Premium $1.4842 LOS ANGELES RBOB $1.3342 ULSD $1.8043 PBOB $1.5642 CARB ULSD $1.8143 Jet $1.8618 PORTLAND Conventional Regular $1.5842 ULSD $1.8018 Conventional Premium $1.6742 Jet $1.8618 CARBOB Regular $1.5842 Suboctane Gasoline $1.4092 CARBOB Premium $1.6742 Conventional Premium $1.6542 SAN FRANCISCO ULSD $1.7693 CARB ULSD $1.7693 Jet $1.8618 Conventional Regular $1.5092 Conventional Premium $1.7892 CARBOB Regular $1.5292 CARBOB Premium $1.7892 Brian L. Milne, 1.609.371.3328, brian.milne@dtn.com, www.dtn.com. (c) 2019 DTN. All rights reserved.