We have a busy morning with Export Sales, Initial Jobless Claims, and U.S. Trade Balance at 7:30 A.M. Central, Factory Orders at 9:00 A.M., EIA Gas Storage at 9:30 A.M. and Dairy Product Sales at 2:00 P.M. On the Corn front we closed lower in yesterday’s action with whispers making the rounds that a decline in the 2017 Corn crop may not drop as earlier predicted from the USDA September estimates. Also weather in Brazil could slow plantings and possibly reduce acreage. In the overnight electronic session the Corn is trading higher with the December contract currently trading at 349 ¾ which is 1 ½ of a cent higher. The trading range has been 350 ¾ to 348.
On the Ethanol front there were no trades posted in the overnight electronic session. The November contract is now the lead month with October’s expiration. The November contract settled at 1.436 and is showing 2 bids @ 1.449 and 3 offers @ 1.459 with Open Interest at 1,103 contracts.
On the Crude Oil front the market is flirting with $50 a barrel and is currently trading at 4998 which is unchanged. The trading range has been 5028 to 4985. This market and the complex seems to sell off on a bogus headline time after time again. Eventually the true fundamentals will wake up investors and realities of the Crude Oil and Products face in the future.
On the Natural Gas front we have the weekly EIA Gas Storage data at 9:30 A.M. and the Thomson Reuters poll of 22 analysts participate expecting expect injections builds anywhere from 42 bcf to 68 bcf with the median at 51 bcf. This compares to last week’s injection of 58 bcf, the one-year at 76 bcf and the five year average of 91 bcf. These numbers kind of paint a picture if we get a weather event with cold and snowy weather and producers will have to ramp up production and could create a squeeze sending the market sailing. In the overnight electronic session the November contract is currently trading at 2.940 which is unchanged. The trading range has been 2.951 to 2.922.
— Daniel Flynn
The Energy Report: Production propped up
Oil prices struggled as U.S. oil production was propped up or was it production propaganda? Regardless, oil prices stayed weak even as productions stayed strong. The Energy Information Administration (EIA) that has come under criticism for overestimating U.S. shale production once again raised this week’s U.S. production number. The EIA estimates that U.S. crude oil production rose by 141,000 bpd (barrels per day) or 1.5% to 9.23 million barrels a day the highest reading since 2015.
That took away some of the thunder from a very bullish 6.023-million-barrel crude oil draw and a smaller 1.52-million-barrel increase in Cushing Oklahoma supply, less that the American Petroleum Institute reported. Gulf Coast supply fell by 4.42 million barrels.
Yet, oil products were supportive as the EIA reported a 2.066 million barrel drop in distillate supply and a 1.644 million barrel in gasoline supply.
With a slight 0.5 drop in refining runs and a slight drop in demand oil stagnated on hopes that somehow the shoulder season will allow distillate and crude supplies to catch up with demand. That may be a bad bet if winter comes early. I know Montana, you are already there.
The Financial Times is reporting that U.S. petroleum market is undergoing its own version of a property downturn with strong demand, emptying fuel storage terminals and depressing rental rates for tanks. The trend indicates a three-year oil glut may be dissipating — good news for energy producers but unwelcome for terminal landlords and traders leasing space they no longer need. U.S. inventories of distillate fuels, such as diesel and jet fuel, have dropped by 25.3m barrels in the past year to 135.4m, the Energy Information Administration reported on Wednesday. Petrol stocks built slightly last week but were down by 8.5m barrels from a year before to 218.9m. Stocks of both products were falling before hurricane Harvey curtailed U.S. oil refinery output in late August.” A must read in the FT!
— Phil Flynn
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