We kickoff this morning with Export Sales and Jobless Claims at 7:30 A.M. Central followed by EIA Gas Storage at 9:30 A.M. The Export Sales number should be interesting with Argentina being a featured buyer of Soybeans on Tuesday and Wednesday. On the Corn front the market is not trading like a raging bull with the fundamentals advertising it should. Corn could lead the way in the Grain complex this year which is something we have not seen in decades. The bottom line is we need a break in the weather and get the farmers in the fields so we do not have a late planting year with demand growing exponentially. Sooner or later we should see a surge in this market. In the overnight electronic session the May Corn is currently trading at 385 ¾ which is 1 ½ of a cent higher. The trading range has been 387 ½ to 385.
On the Ethanol front the Trump administration decided to delay any reforms to the nation’s biofuel policy for three months to shield farmers from any possible trade war China. In the overnight electronic session the May Ethanol is currently trading at 1.505 which is .018 higher. The trading range has been 1.510 to 1.491. 46 contracts traded and Open Interest is at 1,099 contracts. The market is currently showing 2 bids @ 1.498 and 1 offer @ 1.504.
On the Crude Oil front the market is trading lower in the latest talk in the war of words. Will the U.S. strike Syria or will they wait or not strike at all. It is too early for investors to be loading up on long positions as the administration with the administration keeping everyone honest and guessing, especially our enemies. Investors will not want to hold a short position over the weekend in the current geo-political front and certain investors will look to buy value. In the overnight electronic session the May Crude Oil is currently trading at 6652 which is 30 tics lower. The trading range has been 6733 to 6632.
On the Natural Gas front the weekly EIA Gas Storage number will be released at 9:30 A.M. The Thomson Reuters weekly poll with 23 analysts participating expect draws anywhere from 38 bcf to 9 bcf with the expected number of 14 bcf. This compares to last years build of 47 bcf and the five year average build of 38 bcf. In the overnight electronic session the May Natural Gas is currently trading at 2.685 which is 1 cent higher. The trading range has been 2.700 to 2.647.
— Daniel Flynn
The Energy Report: Wars and Rumors
Oil prices have the potential to react strongly to supply disruptions because U.S. oil supply is below the five-year average. Crude prices surged to five-year highs after President Trump vowed to retaliate against Syria for a Chemical Weapons attack and taunted Russia about their threat to shoot down U.S. missiles if they were used against Syria. More buying came in after Saudi Arabia said they intercepted one missile and shot down 2 drones over Riyadh, allegedly fired by Iranian backed Houthi rebels in what could be a subtle message to Saudi Arabia to Iran from not get involved with a Syrian International collation attack.
Despite record shale and Gulf of Mexico oil production, the supply in inventory is under the 30-day demand cover, at 25.4 days. This allows for supply concerns if global supply is disrupted for any amount of time. Even after yesterday’s larger than expected +3.306-million-barrel crude build, over all supply is still tight, and I believe that the surprise increase in supply was based off factors such as a surge in U.S. oil imports and a freak drop in U.S. exports. The EIA reported that crude exports fell by a shocking 970,000 b/d while imports grew by a fantastic 752,000 barrel per day. Over all supply numbers are too close for comfort.
The Energy Information Administration reported that U.S. crude oil production in the Federal Gulf of Mexico (GOM) increased slightly in 2017, reaching 1.65 million b/d, the highest annual level on record. Although briefly hindered by platform outages and pipeline issues in December 2017, oil production in the GOM is expected to continue increasing in 2018 and 2019.
While the Trump Administration has shown their willingness to use the Strategic Petroleum Reserve as a buffer as they did after the rash of hurricanes we had last summer the market is still concerned, more than they would have been just a year ago, about a potential long term disruption of supply. Shale producers can’t raise production quickly and The Gulf of Mexico is already exceeding expectations and that is why oil is acting so strong, even though it is unclear that an attack on Syria will disrupt any supply of oil at all.
Refiners are refining as fast as they can. The EIA reported that U.S. crude oil refinery inputs averaged over 17.0 million barrels per day during the week as refineries operated at 93.5% which is near a record high for this time of year. Gasoline production increased last week, averaging 10.2 million barrels per day. Distillate fuel production increased last week, averaging 5.3 million barrels per day. Cushing builds fifth straight week in a row and products saw total motor gasoline inventories increased by 0.5 million barrels last week, but are in the upper limit of the average range. Finished gasoline inventories increased while blending components inventories decreased last week. Distillate fuel inventories decreased by 1.0 million barrels last week but are in the lower half of the average range for this time of year.
— Phil Flynn
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