We jumpstart this day with Export Sales and Jobless Claims at 7:30 A.M., EIA Gas Storage at 9:30 A.M. and Crop Production USDA Supply/Demand at 11:00 A.M. Make no mistake about it this is a big day for the Grain complex. On the Corn front we have great movement in sales and today’s Export Sales not to mention the big data at 11:00 A.M. is proving the Corn market at these prices are very attractive and we should see product move. In the overnight electronic session the May Corn is currently trading at 387 ¼ which is unchanged. The trading range has been 387 ¼ to 385 ¾. Grain traders and investors, “Buckle Up Your Chinstraps!”
On the Ethanol front the April contract is currently trading at 1.517 which is .002 higher. The trading range has been 1.517 to 1.510. The market is currently showing 2 bids @ 1.515 and 1 offer @ 1.519. 2 contracts changed hands and Open Interest is declining to 1,078 contracts. Today’s Grain reports should further educate us on demand in this market while other countries are exporting Ethanol.
On the Crude Oil front the market shock & awe because of the tariffs shacked, rattled and rolled the Stock Market and rallied the U.S. dollar which caused the selloff. As far as I am concerned this is a typical market overreaction. At the end of the day investors will realize that supply and demand is what takes place in a free market system. And with our current production and storage being outpaced by demand we will see higher prices. In the overnight electronic session the April Crude Oil is currently trading at 6118 which is 3 tics higher. The trading range has been 6140 to 6095.
On the Natural gas front today is Thursday and EIA Gas Storage day and the weekly Thomson Reuters poll with 21 analysts participating expect draws from 44 bcf to 58 bcf with the median of 58 bcf. This compares to last year’s decline of 57 bcf, which was also a warm week and the five-year average of 129 bcf. In the overnight electronic session the April Natural Gas is currently trading at 2.772 which is a ½ of a cent lower. The trading range has been 2.793 to 2.758. With current weather and capacity full especially with the U.S. exporting, until we have less storage in this market and more domestic and global demand expect the floor to drop as we move into shoulder season.
— Daniel Flynn
The Energy Report: Cohn crazy
One economic advisor decides to step down and the markets go crazy. Really? In the meantime, in the real world, oil demand is surging, and supplies are tightening as global demand continues a rampage. In the U.S. we are facing a supply squeeze because of another big drop in Cushing Oklahoma delivery stocks. Forget Gary Cohn. Cushing, we have a problem.
The Energy Information Administration (EIA) released another very bullish inventory report, which you would not know by watching the market action. Fear trumped reality as the departure of Gary Cohn caused turmoil and a sign to those who want to believe it, an all-out price war. Yet, if you look beyond the fear, you have an oil market that is seeing the strongest global demand in decades. It also is seeing the world’s largest oil consumer see their supply drop to fumes in one of its major storage hubs.
The EIA reported that supply fell by 605,000 barrels in Cushing, Oklahoma. That put Cushing supply at the lowest levels since 2014 and helped lead to a smaller by 2.4-million-barrel crude supply build. You can tout U.S. oil production, which increased to 10.369 million barrels a day, but it does not do you a lot of good if you can’t rebuild supply when refiners are in maintenance. U.S. crude oil refinery inputs increased slightly to 15.9 million up 53,000 barrels per day as refiners upped runs to 88.0% of their operable capacity. U.S. oil exports did play a part by increasing by 608,000 barrels as U.Ss oil goes to feed an oil hungry world.
Despite trade war, fears the reality is that nothing has happened yet. Oil demand is on fire despite predictions by some agencies that it would not be. Yet, it will be demand that drives prices, not shale or even OPEC cuts. That sentiment is shared with EXXON Mobil. Exxon told Bloomberg News that ” Soaring demand is the main reason for the rebound in oil prices — but if the economy falters, crude could tumble back to $40/bbl, according to ExxonMobil. Copycats by OPEC countries have helped, but economic expansion is what’s “really driving demand at levels much higher than recent history,” CEO Darren Woods said Wednesday in a presentation to analysts in New York. “When that demand starts to tail off, if Permian production continues to rise, I think that you’re going to see a different rebalancing of the market and OPEC will have to make some calls around how they want to manage that,” Woods said.
Yet, it is what Exxon Mobil says next that may leave the market undersupplied. “Exxon can’t rely on short-term market swings to make long-term investment plans, so the company tests its decisions with oil at $40/bbl, Woods said. “You could find yourself back in there, depending on how this all plays out.”
So, fear of $40 a barrel means that Exxon won’t make the investments that the oil market seems to be screaming for right now. In other words, if the trade war fears are over hyped and the economy keeps growing like it is, then we are going to be undersupplied.
The Cohn craziness did not cause people to stop driving their cars, as far as I know. I don’t think it caused anyone to cancel their flights. Its all about the demand. Demand for oil products, according to the EIA, averaged 20.3 million barrels per day, up by 3.4% from last year where demand was exceptional. Gasoline demand is at a near record 9.0 million barrels per day, up by 3.3% from last year. Distillate fuel demand was at 4.0 million barrels up 0.6% from year. Jet fuel demand really soared to the wild blue yonder and is up 18.3% compared to last year. Gasoline stocks fell by 788,000 barrels, distillate supply down by 559,000 barrels.
— Phil Flynn
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