EIA Insights February 20, 2020

EIA Insights February 20, 2020

Withdrawal Greater Than Expectations

The EIA reported a 151 Bcf withdrawal for the week ending February 14, 2020. The withdrawal was at the average for this week of the year, 150 Bcf, but more than the average of expectations of a 143 Bcf withdrawal.

Storage at 2,343 Bcf is 638 Bcf above last year at this time and 200 Bcf above the 5-year average. The report was mildly bullish to prices and prices jumped with the release of the report. but then trailed down for the remainder of the trading day.

According to the EIA, there were larger than expected power burns in the Midwest that led to an unexpected large draw in the Midwest region. The region experienced some of the coldest temperatures on record, withdrawing a significant 55 Bcf from storage. At the current rate of withdrawals, storage at the end of the withdrawal season will be close to 2,000 Bcf, a level not supportive of higher prices.

 

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DOE Insights February 20, 2020

DOE Insights February 20, 2020

Crude Oil Stocks Build, Much Less than Expectations

The DOE reported Total Crude Oil Inventories increased by 415, 000 barrels to 442.9 million barrels for the week ending February 14, 2020, while the expectations average was for a 2.5 million barrel build.

Total hydrocarbon supplies decreased by 1 million barrels to 1,293 million barrels.

Crude Oil Production was unchanged at 3.0 million barrels per day.

Total Crude Imports decreased by 400,000 barrels per day to 6.5 million barrels per day.

Total Crude Exports increased by 594,000 barrels per day to 3.6 million barrels per day.

Total Refinery Crude Runs increased by 200,000 barrels per day to 16.21 million barrels per day.

The DOE report on crude stocks was bullish to prices and have prices have been on an extended rally for the last 10 days. Supporting prices is the decreasing number of new coronavirus cases in China easing concerns about the impact of COVID-19 on the Chinese economy. The US Treasury Department has announced imposition of sanctions on the Russian Rosneft trading operation for its dealings with Venezuela resulting in production declines in Venezuela and that will also support prices.

 

Gasoline Stocks Draw, Expectations were for a Build

Total MotorGasoline Inventories decreased by 200,000 barrels to 259.0 million barrels for the week ending February 14, 2020. The expectations average was for a .4 million barrel increase.

Implied Demand increased by 570,000 barrels per day to 10.2 million barrels per day.

Gasoline Production was up 280,00 barrels per day to 9.53 million barrels per day.

Gasoline stocks have seasonally peaked and demand has returned. The near-term conditions are bullish to RBOB prices so we expect the rally to continue.

 

Distillates Stocks Draw, Less than Expectations

Total Distillates Stocks decreased by 600,000 barrels to 140.6 million barrels for the week ending February 14, 2020, while the expectations average was for a 1.5 million barrel draw.

Total Distillates Production increased by 20,000 barrels per day 4.85 million barrels per day.

Total Distillates Implied Demand decreased by 160,000 barrels per day to 5.07 million barrels per day.

Distillate stocks are seasonally drawing, production is down, and demand is up. These are bullish factors supporting prices.

 

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Baker Hughes Oil Rig February 21, 2020

Baker Hughes Oil Rig February 21, 2020

Latest Baker Hughes Report

The Baker Hughes rig count reported the U.S. oil rig count increased by 1 to 679.

With all the geo-political issues impacting oil prices we do not expect any significant change in the oil rig count.

 

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CFTC Crude Oil February 21, 2020

CFTC Crude Oil February 21, 2020

Latest CFTC Report

The CFTC Commitment of Traders Report as of Tuesday, February 18, 2020 shows the Non-Commercials Net Long Positions in WTI Crude Oil decreased during the week by 3,345 contracts to 410,285 contracts. 750 Long positions were added and 4,095 new Short positions were added.

The rate of decrease of the fund’s net long positions is slowing, market sentiment is less bearish.

 

 

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CFTC CBOT Wheat February 26, 2020

Hedge Funds Net Long Positions in CBOT Wheat contracts and CBOT Wheat Price
Latest CFTC Report
          Recently there has been a significant increase in the large hedge funds long positions in CBOT Wheat as reported by the CFTC
Commitment of Traders. Viewing the black line in Figure 1 we observe the funds have increased their long positions from about 90,000 contracts last December to 165,000 contracts in the most recent report. This is the largest long positions since January 2014. We have also plotted the short positions (the red line) at about 105,000 contracts in the most recent report.
          Figure 2 plots the net positions of the funds in CBOT Wheat as the difference between the longs and shorts (the green spikes) at about 60,000 net long contracts.
          Figure 3 plots the net positions of the funds in CBOT Wheat (green spikes) with the CBOT Wheat prices (black line). The funds net positions track the prices showing net long positions occur during periods of price rallies. What is unusual about this current period is that the net long positions have been increasing during a period of price decreases. This suggest the large hedge funds believe prices are expected to rally soon as they have increased their net long positions during a period of decreasing prices.

 

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DOE Insights February 26, 2020

DOE Insights February 26, 2020

Crude Oil Stocks Build, Less than Expectations

The DOE reported Total Crude Oil Inventories increased by 452, 000 barrels to 443.3 million barrels for the week ending February 21, 2020, while the expectations average was for a 2.0 million barrel build.

Total hydrocarbon supplies decreased by 2.1 million barrels to 1,290 million barrels.

Crude Oil Production was unchanged at 13.0 million barrels per day.

Total Crude Imports decreased by 300,000 barrels per day to 6.2 million barrels per day.

Total Crude Exports increased by 930,000 barrels per day to 3.7 million barrels per day.

Total Refinery Crude Runs decreased by 200,000 barrels per day to 16.01 million barrels per day.

This has been a major reversal of the crude oil price gains made in the past two weeks, prices have been under pressure due to growing concerns about the international spread of COVID-19. Physical oil markets have already been affected by weaker demand, but until this point market weakness had been centered mainly on China.

 

Gasoline Stocks Draw, Greater than Expectations

Total MotorGasoline Inventories decreased by 2.7 million barrels to 256.4 million barrels for the week ending February 21, 2020. The expectations average was for a 2.2 million barrel decrease.

Implied Demand increased by 360,000 barrels per day to 10.6 million barrels per day.

Gasoline Production was up 270,00 barrels per day to 9.80 million barrels per day.

Gasoline stocks have seasonally peaked and demand has returned. But gasoline prices are trading in tandem with crude oil prices.

 

Distillates Stocks Draw, Greater than Expectations

Total Distillates Stocks decreased by 2.1 million barrels to 138.5 million barrels for the week ending February 21, 2020, while the expectations average was for a 1.7 million barrel draw.

Total Distillates Production was basically unchanged at 4.85 million barrels per day.

Total Distillates Implied Demand increased by 260,000 barrels per day to 5.33 million barrels per day.

Distillate stocks are seasonally drawing, production is down, and demand is up. These are bullish factors supporting prices but HO prices more influenced by crude oil.

 

 

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EIA Insights February 27, 2020

EIA Insights February 27, 2020

Withdrawal Less Than Expectations

The EIA reported a 143 Bcf withdrawal for the week ending February 21, 2020. The withdrawal was greater than the average for this week of the year, 98 Bcf, but less than the average of expectations of a 152 Bcf withdrawal.

Storage at 2,200 Bcf is 662 Bcf above last year at this time and 179 Bcf above the 5-year average. The report was mildly bearish to prices and prices dropped with the release of the report. Prices did recover but still ended down about 8 cents for the trading day.

Over the weekend, weather forecasts turned warmer, pressuring prices. Prices have been falling through the week and broke below $1.80 this morning. With weather forecasts showing normal to above-normal temperatures in areas with high demands for heat, market sentiment is very bearish. Natural gas is a component of the energy complex. Natural gas prices are influenced by crude oil prices, so the $7 drop in crude oil prices this week also pressured natural gas prices.

 

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Baker Hughes Oil Rig February 28, 2020

Baker Hughes Oil Rig February 28, 2020

Latest Baker Hughes Report

The Baker Hughes rig count reported the U.S. oil rig count decreased by 1 to 678.

With all the geo-political issues impacting oil prices we do not expect any significant change in the oil rig count.

 

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The Fundamental Analytics Team

CFTC Crude Oil February 28, 2020

CFTC Crude Oil February 28, 2020

Latest CFTC Report

The CFTC Commitment of Traders Report as of Tuesday, February 25,2020 shows the Non-Commercials Net Long Positions in WTI Crude Oil increased during the week by 26,303 contracts to 436,588 contracts. 11,974 Long positions were closed but a significant 38,277 Short positions were covered. So, while the Net Long Positions increased it was due to the shorts exiting.