This morning we have Consumer Confidence at 9:00 A.M. Central, which should be interesting with all the tariff talk and what investors expected Friday with a trade war with China seems to be averted with the U.S. holding all the cards and the good news that this administration is doing everything in its power to keep this economy rolling an d is such a welcome sign as the Stock Market rally is testimony to that. We also have API Energy Stocks at 3:30 P.M. On the Corn front investors are waiting for Thursday’s Prospective Plantings and Grains Stocks at 11:00 A.M. There are several factors that if you connect the dots you want to be long. Acreage will be lower this year, the South American crop is stressed, Ethanol demand continues to rise with no end in sight, a wet spring is forecasted which could further delay plantings and funds are realizing that this market is awakening from a long slumber. In the overnight electronic session the May Corn is currently trading at 376 which is 2 cents higher. The trading range has been 376 to 373 ¾.
On the Ethanol front the May contract is in firm control of volume and Open Interest as we edge closer to the summer driving season and with a bullish Corn and Energy sector we can only expect this will fuel the Ethanol market. In the overnight electronic session the May contract is currently trading at 1.452 which is .001 higher. The trading range has been 1.455 to 1.449. The market is currently showing 5 bids @ 1.451 and 2 offers @ 1.454. 15 contracts changed hands and Open Interest is at 929 contracts.
On the Crude Oil front the market is rolling with the Saudi Oil minister stating that 7 OPEC countries are having supply fears and problems. This news put a spike in the market this morning. In the overnight electronic session the May Crude Oil is currently trading at 6622 which is 67 points higher. The trading range has been 6641 to 6549.
On the Natural Gas front the April contract expires today. The May contract is currently trading at 2.762 which is 1 ½ of a cent higher. The trading range has been 2.695 to 2.660. I believe this market is ready to seek a new bottom. Even with product moving unlike Crude Oil this market has plenty of supply coming out of the ground.
— Daniel Flynn
The Energy Report: Cushing cushion?
Oil prices dipped, as trade war fears went away on a private report that might indicate that crude oil supplies may see a big increase this week. Genscape, the widely followed energy market data and intelligence company, reported that oil supply in Cushing Oklahoma was up 2.18 million barrels last week. The increase and the fact that some of the Geo-Political concerns did not actually blow up into a supply disruption over the weekend led to a correction in the oil price.
Still, with refining margins on the rise and a tightening global oil market, a one-week build will not be enough to break the oil markets upward momentum. Refining margins were higher across the board in the U.S. last week, as refined products price gains outpaced a climb in crude supply costs, an analysis of S&P Global Platts data showed Monday. Oil should mount a comeback even though there may be some trepidation about this week’s crude data. Global demand continues to rise as OPEC is still resolved to keep oil on the upswing and not allow another glut to grow.
Last week Saudi Arabian Energy Minister Khalid al-Falih proposed to keep production cuts in place to get supplies back to the seven-year average, as opposed to the five-year average, which would call for an even larger reduction of oversupply. Of course, he may be playing with fire as the risk of over tightening the market leading to a price spike that could hurt global growth may be increasing. Still that prospect is down the line and not to be worried about as we see refiners ramp up production to meet demand.
This comes as the Energy Information Administration feels compelled to defend their data on oil production, as they are getting a lot of flack from people inside and outside of the industry. The EIA explains why they feel that data that is coming out of the Texas Railroad Commission, that is showing much less production, is behind.
The EIA writes that “Crude oil and lease condensate production data for Texas, published by EIA in its Petroleum Supply Monthly (PSM) and by the Texas Railroad Commission (TRRC), reflect differences in the treatment of incomplete and lagged data. Data published by state agencies are often incomplete when first published, because of a combination of late reporting and processing delays.
TRRC’s most recent report (published March 2018, with estimates through December 2017) is consistent through January 2017 with production estimates in the PSM, but, after January, the two sources diverge. This divergence increases for more recent months: EIA’s most recent production estimates for Texas, published in the PSM on February 28, 2018, show Texas’s crude oil production reaching 3.93 million barrels per day (b/d) in December 2017. TRRC’s values show production at 2.99 million b/d in that same month.
EIA develops state-level production estimates for Texas based on its EIA-914 survey. The EIA-914 survey for oil production was established in 2015, in part to make up for the deficiencies of estimating based on initial state agency reports. EIA monthly oil production volumes are different from the Texas Railroad Commission volumes initially, but as time passes, these differences diminish as TRRC updates and revises its data. EIA’s methodology anticipates and accounts for these expected revisions.
So, there you have it. Yet it still does not fully answer the question, why U.S. oil inventories are falling as production keeps rising? Oh yea, maybe its demand. Or maybe the EIA will have a downward production revision in the future as well.
— Phil Flynn
The Price Futures Group’s mission is to provide traders and investors with industry-leading trading solutions, informative market analysis, and cutting-edge technologies which enable efficient decision-making. The Group is available answer marketing questions and meet your investment needs. Find the company online at www.pricegroup.com or call the Chicago office at (888) 264-5665.