WTI crude oil prices settled lower on Monday despite a rebound from session lows as a fall in U.S. supplies at a key delivery hub failed to offset concerns over a ramp up in Russian and Saudi output. On the New York Mercantile Exchange crude futures for August delivery fell 21 cents, to settle at $73.94 a barrel, while on London's Intercontinental Exchange, Brent lost 0.5% to trade at $78.86 a barrel. Information provider Genscape said U.S. crude inventories at Cushing had fallen in the week, according to traders. Stockpiles at the hub fell 3.2 million barrels in the week to June 22, but rose slightly in the four following days to June 26. The fall in Cushing supplies come as a production shutdown at Canada's Syncrude, which has capacity to produce 350,000 barrels per day of oil, continued to drain crude supply across North America.
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The premium for U.S. crude for the front month compared with the second month CLc1-CLc2 widened to as much as $2.38 a barrel, the most since Aug. 20, 2014. The move indicates the market expects supply shortages to be more severe in the short term. Information provider Genscape said U.S. crude inventories at the Cushing, Oklahoma, delivery hub had fallen in the week, traders said. Genscape said stockpiles at the hub were down 3.2 million barrels in the week to June 22, but rose slightly in the four following days to June 26. Cushing supplies are down partially due to an outage in Canada. Production at Syncrude Canada’s oil sands facility near Fort McMurray, Alberta, is likely to remain offline at least through July, a Suncor Energy Inc (SU.TO) spokeswoman reaffirmed on Tuesday.
As the financial industry accelerates its use of new data sources, experts including Leigh Drogen, CEO of Estimize; Ruggero Gramatica, CEO and Co-Founder of Yewno; Stephen Malinak, Chief Data and Analytics Officer of TruValue Labs; and Ben Chu, Manager of Equity Projects at Genscape discussed the how investment professionals can best navigate an increasingly crowded marketplace.
The U.S. demands follow a decision by the Organization of the Petroleum Exporting Countries last week to increase production to try to moderate oil prices that have rallied more than 40 percent over the last year. Oil prices have rallied for much of 2018 on tightening market conditions due to record demand and voluntary supply cuts led by OPEC and other producers including Russia. Unplanned supply disruptions from Canada to Libya and Venezuela also have supported prices. U.S crude futures also extended gains after data showed inventories at the Cushing, Oklahoma, delivery hub fell by 3.1 million barrels in the week through June 26, traders said, citing data from market intelligence firm Genscape. Front-month WTI's premium to the second month surged to a session high of $1.73 a barrel after the data, while U.S. crude's discount to Brent also narrowed to the smallest in three months at $4.32 a barrel.
On the demand side, another round of hotter-than-normal weather was expected to lift power burns into the weekly average range around 36 Bcf/d, about 5 Bcf/d higher than last week’s average burns. Lower 48 population GWDDs are forecast to come in about 25% hotter than normal for this time of year, with the greatest departures forecast for New England and Midwest/Midwest Independent System Operator markets, Genscape said.
Rising crude prices have U.S. producers drilling for more oil than ever, with natural gas produced as a byproduct. While some of that gas is going into power generation - offsetting coal power even as Trump has promised to bail out struggling nuclear and coal plants - there is still more than is needed domestically.
Gas trade rose 6.2 percent in 2017, according to a report by BP, with LNG demand up more than 10 percent in its best year since 2010.
“The needle is moving significantly, both on the supply and demand side,” said Eric Fell, an analyst with Genscape.
One tanker LNG-carrying capacity 3.6 Bcf was loading at the Sabine Pass terminal on Wednesday. Train 3 at the Sabine Pass liquefaction terminal, which has been shut down since May 16, reportedly returned to full production around June 14, according to Genscape. Natural gas feedstock to the facility has increased to 3.0 billion cubic feet per day on Monday, after averaging 2.2 Bcf/d since May 15, according to data by the EIA.
Permian Basin prices experienced their own volatility as regional production remains below highs seen in mid-April. Genscape on Thursday said Permian production has averaged ~7.35 Bcf/d for the last week, coming in low Wednesday at around 7.09 bcf/d and bouncing back up to around 7.25 Bcf/d for Thursday. These levels are down from a high of 7.94 Bcf/d in mid-April.
CNBC's Brian Sullivan speaks with Clay Siegel, Genscape managing director, about the production deal reached by OPEC members.
In another maritime accident tank barge Piz Ela was refloated with the help of a sister vessel near Duisburg on the Rhine on 21 June. Self-propelled tank barge Piz Albris was deployed from Antwerp on 19 June and was used to lighter a cargo of caustic soda from Piz Ela to help it refloat. This was successfully achieved with assistance from tugboat Inge II, according to Vesseltracker.