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,"
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
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
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
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
CARB ULSD $1.7693
Conventional Regular $1.5092
Conventional Premium $1.7892
CARBOB Regular $1.5292
CARBOB Premium $1.7892
Brian L. Milne, 1.609.371.3328, email@example.com, www.dtn.com. (c) 2019
DTN. All rights reserved.