EIA Insights June 14, 2018

Injection Greater Than Expectations

The EIA reported a 96 bcf Injection for the week ending June 8, 2018. The 96 bcf injection was above average, 89. for this week of the year, and greater than the average of expectations at 91 bcf injection, with a range of an 85 injection to a 98 bcf injection. Analysts are now hoping for some +100 bcf injections in September to reach 3,500 bcf by November. We believe that is a stretch.

The computer weather model estimate was in agreement with the injection indicating supply and demand were in balance.

Prices fell with the release of the report but rallied through the trading day, ending at nearly unchanged for the day.

DOE Insights, June 13, 2018

DOE Insights  

Wednesday, June 13, 2018

Crude Oil Stocks Draw, Greater than Expectations

The DOE reported Total Crude Oil Inventories decreased by 4.1 million barrels to 432.4 million barrels for the week ending June 8, 2018, expectations average was for a 1.6 million barrel decrease, with a range of 4.7 million draw to a 1.5 million barrel build.

Overall hydrocarbon supplies decreased by 1.8 million barrels to 1,208 million barrels.

Crude Oil Production increased by 100,000 barrels per day to a record 10.90 million barrels per day.

Total Crude Imports were off 200,000 barrels per day to 8.1 million barrels per day.

Total Refinery Crude Runs were up by 140,000 barrels per day to 17.51 million barrels per day.

Gasoline Stocks Draw, Expectations were for a Build

Total MotorGasoline Inventories decreased by 2.3 million barrels to 236.8 million barrels for the week ending June 8, 2018, average of expectations was for a build of 700,000 barrels, with a range of a 1.6 million barrel draw to a 3.3 million barrel build.

Implied Demand was up by 1.82 million barrels per day at 11.60 million barrels per day.

Gasoline Production was also up, by 790,000 barrel per day to 10.45 million barrels per day.

Distillates Stocks Decrease, Expectations were for a Build 

Total Distillates Stocks decreased by 2.1 million barrels to 114.7 million barrels for the week ending June 8, 2018, average of expectations was for a build of 400,000 barrels, with a range of a draw of 1.5 million barrels to a build of 2.5 million barrels.

Total Distillates Production was off by 210,000 barrels to 5.11 million barrels per day.

Total Distillates Implied Demand was up by 350,000 barrels per day to 5.52 million barrels per day.

Commodity Market Update, June 13, 2018

Commodity News Update

June 13, 2018

The goal of this report is to provide our readers with some important fundamental and technical trends in commodity markets this week.

Energy Market Update:
Total Distillate Stocks at record lows
Despite high production rates and reduced Demand, Total Distillate Stocks remain at record lows for this time of year as demonstrated in the chart below, where the black line represents 2018.

The ratio of the Demand to Stocks to the Days Forward Supply, a measure that adjusts for Stocks and Demand, is also at historic lows as shown in the chart below where the black line represents 2018.

As a result, Heating Oil prices have dropped less than Crude Oil prices have dropped since May 29. Therefore the refiner’s margin – i.e. the Crack Spread, which is the difference between the raw material cost, Crude Oil, and the finished product price, Heating Oil – has widened. This is clearly illustrated in the December Heating Oil Crack Spread chart below, where the black line represents 2018. This is valuable to refiners’ margins and if this situation continues traders may consider going long the December or January Crack Spread.
Agriculture Market Update: USDA World Agricultural Supply and Demand Report
Soybeans:
The June USDA WASDE Report today indicated that US Soybean supplies will likely fall in the upcoming marketing year due to high domestic demand and strong exports. The value of the July futures contract for Soybeans jumped by 5 cents per bushel after the report was released but fell back during the trading day. We will need to view the longer term implications on price. However, if Ending Stocks estimates continue to reduce a trader may consider going long November Soybeans and a producer may consider putting on a hedge.

The USDA estimated Soybeans ending stocks for 2017/18 at 505 million bushels, far below Reuters analysts’ estimate of 522 million bushels. The USDA estimate for 2018/19 was 385 million bushels, also far below analysts’ estimate for of 417 million bushels. The chart below shows Soybean Ending Stocks back to 2006/07.

Corn:
Corn futures also jumped after the report was released since the June numbers were below Reuters analysts’ estimates. The July Corn futures contract jumped by 4 cents per bushel. Corn continued to rally throughout the trading day. We will watch to see if this rally is sustained. Should the Ending Stocks projections continue to decline a trader may consider going long outrights or bull spreads and producers may consider hedging their production.

Ending stocks of Corn at 2.102 billion bushels for 2017/18 were below Reuters analysts estimates of 2.166 billion bushels, and 1.577 billion bushels for 2018/19 were below analysts estimates of 1.663 billion bushels. The chart below shows Corn Ending Stocks back to 2006/07.

Wheat:
The July Wheat contract jumped from by 9 cents per bushel after the report was released, even though the June numbers were in line with Reuters analysts’ estimates. Wheat rallied even stronger than Corn throughout the trading day. If Wheat continues to outperform Corn a producer may consider a Wheat to Corn hedge play to protect production.
Ending stocks of Wheat at 1.080 billion bushels for 2017/18 were in line with Reuters analysts’ estimates of 1.079. For 2018/19, ending stocks at .946 billion bushels were slightly below estimates of .958 billion bushels. The chart below shows Wheat ending stocks back to 2006/07.

EIA Insights, June 7, 2018

EIA Insights

 

Thursday, June 7, 2018
Injection At Expectations
The EIA reported a 92 bcf Injection for the week ending June 1, 2018. The 92 bcf injection was at the average for this week of the year, and in agreement with the average of expectations 92 bcf injection, with a range of a 75 injection to a 100 bcf injection. As we have mentioned before, analysts generally are of the opinion that storage will reach around 3,500 – 3,600 bcf by November, but that will require some substantial above average injections this summer season, which was not the case last summer. See the Injection Distribution and Cumulative Injection charts below.
The computer weather model estimated an injection of 78 bcf suggesting supply was much greater than demand during this past week.

Prices fell with the release of the report and trailed down for rest of the trading day settling at the 2.93 level.

DOE Insights June 5, 2018

DOE Insights  

Wednesday, June 5, 2018

Crude Oil Stocks Build, Expectations were for a Draw

The DOE reported Total Crude Oil Inventories increased by 2.1 million barrels to 436.6 million barrels for the week ending June 5, 2018, expectations average was for a 1.9 million barrel decrease, with a range of 3.7 million draw to a 2.5 million barrel build.

Overall hydrocarbon supplies increased by a significant 15.8 million barrels to 1,210 million barrels.

Crude Oil Production increased by 30,000 barrels to a record 10.80 million barrels per day.

Total Crude Imports were up by 700,000 barrels per day to 8.3 million barrels per day.

Total Refinery Crude Runs were up by 210,000 barrels per day to 17.37 million barrels per day.

Gasoline Stocks Build, Greater than Expectations 

Total MotorGasoline Inventories increased by 4.6 million barrels to 239.0 million barrels for the week ending June 5, 2018, average of expectations was for a build of 400,000 barrels, with a range of a 1.7 million barrel draw to a 1.4 million barrel build.

Implied Demand was down by 1.54 million barrels per day at 9.78 million barrels per day.

Gasoline Production was also down, by 780,000 barrels per day to 9.66 million barrels per day.

Distillates Stocks Build , Greater than Expectations

Total Distillates Stocks increased by 2.2 million barrels to 116.8 million barrels for the week ending June 5, 2018, average of expectations was for a build  900,000 barrels, with a range of a draw of 1.0 million barrels to a build of 3.5 million barrels.  Despite the build Stocks remain at record lows for this time of the year.

Total Distillates Production was up 30,000 barrels to 5.32 million barrels per day.

Total Distillates Implied Demand was off by 280,000 barrels per day to 5.16 million barrels per day.

 

 

Commodity Market Update, June 6, 2018

Commodity News Update

June 5, 2018

The goal of this report is to provide our readers with some important fundamental and technical trends in commodity markets this week.

Energy Market Update:
US WTI Crude Oil Prices Drop

US WTI Crude Oil Prices have dropped from over $72 a barrel to $65 a barrel since May 25, partially because of the expectation of increased Crude Oil supplies from OPEC and Russia. See the chart below, where the black line represents 2018 prices.

The US WTI Crude Oil Price dropped more than the European Brent Crude Oil price, causing the spread between the August WTI Crude Oil Price and the August Brent Crude Oil to hit a record low of -$11, meaning US WTI Crude is priced $11 below European Brent Crude. Thus, there is an arbitrage opportunity for US Brent Crude to go to Europe. The chart below shows the drop in value of the August 2018 spread between May and June, represented by the black line.
Agriculture Market Update
Corn:

According to the latest Foreign Agriculture Service (FAS) report, as of May 24, 2018, the Corn Accumulated Exports was 37,557,206 metric tons. The Total Accumulated Export chart below shows that, if the new trend continues, the Accumulated Exports could reach the record level of the 2017 market year (represented by the red line on the first chart below). World Demand for corn is strong and US corn prices are relatively low, encouraging foreign purchasing of US corn. See the charts below, where the black line represents the current market year.

Soybeans:

Similarly, according to the latest Foreign Agriculture Service (FAS) report, the Soybeans Accumulated Exports was 46,088,141 metric tons. The Total Accumulated Exports chart below shows that exports are strong, although the seasonal trend tends to flatten during this coming period in the market year, so we do not expect Accumulated Exports to reach the level of 2017 (represented by the red line on the first chart below). However, as we mentioned above with corn, World Demand for soybeans is strong and US soybeans prices are relatively low, encouraging foreign purchasing of soybeans. See the charts below, where the black line represents the current market year.

EIA Insights, May 31, 2018

EIA Insights

 

Thursday, May 31, 2018
Injection Less Than Expectations

The EIA reported a 96 bcf Injection for the week ending May 25, 2018.  The 96 bcf injection was at the average for this week of the year, but less than average of expectations 102 bcf injection, with a range of a 98 injection to a 107 bcf injection.

Analysts generally are of the opinion that storage will reach around 3,500 – 3,600 bcf by November but that will require some substantial above average injections this summer season, which was not the case last summer. See the Injection Distribution and Cumulative Injection charts below.

The computer weather model estimated an injection of 93 bcf suggesting supply was greater than demand during this past week.

Prices rallied with the release of the report to the 2.98 level and then fell back throughout the trading day settling back to the 2.94 level, about a 6 cent gain for the day.

DOE Insights, May 31, 2018

DOE Insights 

Thursday May 31, 2018 

Crude Oil Stocks Draw, Greater Than Expectations

The DOE reported Total Crude Oil Inventories decreased by 3.6 million barrels to 434.5 million barrels for the week ending May 25, 2018, expectations average was for a 600,000 barrel decrease.

Overall hydrocarbon supplies increased by 1.8 million barrels.

Crude Oil Production increased by 44,000 barrels to 10.77 million barrels per day.

Total Crude Imports were up by 600,000 barrels per day to 7.6 million barrels per day.

Total Refinery Crude Runs were up by 500,000 barrels per day to 17.16 million barrels per day.

(See charts below.)

Gasoline Stocks Build, Expectations were for a Draw

Total MotorGasoline Inventories increased by .5 million barrels to 234.4 million barrels for the week ending May 25, 2018, average expectations was for a draw of 1.5 million barrels.

Implied Demand was up by 130,000 barrels per day at 11.3 barrels per day.

Gasoline Production was up by 380,000 barrels per day to 10.43 million barrels per day.

Distillates Stocks Build, Expectations were for a Draw

Total Distillates Stocks increased by 600,000 barrels to 114.6 million barrels for the week ending in May 25, 2018, average of expectations was for a draw of 1.1 million barrels. Stocks remain at record lows. Cracks should be supported.

Total Distillates Production was up 360,000 barrels to 5.30 million barrels per day.

Total Distillates Implied Demand was up 340,000 barrels per day to 5.44 million barrels per day.

 

Commodity News Update

Commodity News Update

 

The goal of this bi-weekly newsletter is to provide our followers with some of the most important fundamental and technical trends in commodity markets this week.

Weekly Department of Energy release shows surprising increase in crude oil inventories. 

The weekly Department of Energy release for the week ending May 18 reported Total Crude Oil Inventories increased by 5.8 million barrels to 438.1 million barrels. At  the same time, Total MotorGasoline inventories increased by 1.9 million barrels to 233.9 million barrels. For Fundamental Analytics analysis of the DOE, release, click on this link.

Foreign Agricultural Service Export Sales as of Thursday, May 17, 2018

The Foreign Agricultural Service (FAS) export sales report shows accumulated exports of corn and soybean are in line with expectations. However, likely due to the US-China trade dispute over agricultural tariffs, export sales for soybeans were not cancellations. See the charts below for more information.

Corn:

Combined Old Crop and New Crop Corn sales totaled 1,127,728 metric tonnes (black line denotes 2017/2018 market year).

Corn Accumulated Export sales at 35.662 million metric tonnes, now at 95% of USDA goal for the 2017/2018 marketing year. There is potential for this market year to reach the record levels of 2017 (the black line denotes the 2017/2018 market year).

Soybeans:

Combined Old Crop and New Crop Soybeans sales were a net cancellation of 139,450 metric tonnes. This created a record low where the net exports was a negative of 132,561 metric tonnes. The net exports negative was potentially in response to the US-China trade dispute over agricultural tariffs (the black line denotes the 2017/2018 market year).

 

Soybean accumulated Exports Sales were reported at 45.440 million metric tonnes, now at 98% of USDA goal for the 2017/2018 marketing year.

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DOE Insights, May 23, 2018

DOE Insights 

Wednesday May 23, 2018 

Crude Oil Stocks Large Build, While Expectations were for a Draw, Large Surprise

The DOE reported Total Crude Oil Inventories increased by 5.8 million barrels to 438.1 million barrels for the week ending May 18, 2018, expectations average was for a 2.2 million barrel decrease, with a range of 3.7 million draw to a .7 million barrel draw.

Overall hydrocarbon supplies increased by 6.7 million barrels.

Crude Oil Production was unchanged at 10.7 million barrels per day.

Total Crude Imports were up by 600,000 barrels per day to 8.2 million barrels per day.

Total Refinery Crude Runs were off by 100,000 barrels per day to 16.63 million barrels per day.

Gasoline Stocks Build, Expectations were for a draw. Another surprise

Total MotorGasoline Inventories increased by 1.9 million barrels to 233.9 million barrels for the week ending May 18, 2018, average expectations was for a draw of 1.4 million barrels, with a range of a draw of 4.7 million barrels to a .6 million barrel draw.

Implied Demand was off by 880,000 barrels per day at 10.85 million barrels per day.

Gasoline Production was off by 410,000 barrels er day to 10.05 million barrels per day.


Distillates Stocks Draw, Close to Expectations

Total Distillates Stocks decreased by 100,000 barrels to 114.0 million barrels for the week ending May 18, 2018, average expectations was for a draw of 1.1 million barrels, with a range from a 2.6 million draw to a .5 million barrel build. Stocks are now at record lows. Cracks should be supported.

Distillates Production was down 90,000 barrels to 4.94 million barrels per day.

Total Distillates Implied Demand was down 20,000 barrels per day to 5.10 million barrels per day.