- Top Five Mistakes to Avoid in Online Dating
- Farr: Money, Jobs and Politics — We're Still in a State of Risk
- Bindi: Charm is Not Enough for Italy's Prime Minister Mario Monti
- Christakos: Getting Ready to Retire? Start by Rightsizing Your Home
- Morici: Curb Trade Deficit, Rev Up Oil to Engineer More Growth and Jobs
- Guest Blog: Tax Doesn't Have to Be Taxing
- How to Date a Wall Street Man
- Charfen: Hitting Bottom and Starting Over
- Scott: Can Being Bored Make You More Successful?
- CEO Blog: The Truth Behind Brand Building
- Tesla Unveils First SUV: Model X
- New York Fashion Week Hits the Runway as Colors Pop
- Mulling Buffett's Stock Advice? Get in With REITs: Fund Managers
- LinkedIn Earnings Bode Well for Hiring and Social Media
- Top Five Mistakes to Avoid in Online Dating
- Victor Cruz ‘Understands’ Gisele's Super Bowl Frustrations
- Tamminen: The United States of India
- Unusual Volume: Taleo Jumps After Oracle's $1.9 Billion Offer
- Warren Buffett: Stocks Will Outperform Gold and Bonds .. and They're Safer 'By Far'
- Bonus Bloodbath as European Banker Backlash Continues
- Stocks Looking Past Europe for a New Driver of the Rally
- Israel Likely to Bomb Iran This Year: Political Analyst
- Greeks on Strike as the Second Bailout Is in Limbo
- EU Agrees Rules for $700 Trillion Derivatives Market
- The World's Best Beers
- Citigroup Takes $50 Million Loss in Lending Rate Probe
- Barclays Warns May Miss Medium-Term Profit Goal
- Will Romney Regret Opposing Michigan Auto Bailout?
RSS FEED
CNBC Guest Blog
Text Size 
Schork Oil Outlook: One Week Does Not Make A Trend
Stephen Schork
Editor of
"The Schork Report"
ENERGY PRICES WERE MIXED ON WEDNESDAY… oil markets moved higher because – you know why –because equities moved higher. Meantime, natty moved lower because – you know why – because unlike oil, the price path in natural gas correlates to its fundamentals… and not the stock market.
As such, you know the refrain… the U.S. is swimming in crude oil. You also know the other refrain… that doesn’t matter because equities moved higher yesterday.
Bottom line, once again, nothing changed last week. The report was bearish. Per yesterday’s numbers, transportation fuels (mogas, diesel, jet…) fell, but one week does not a trend make. On the other hand, heating fuels surged, as did stocks of commercial and government crude oil. As a result, total U.S. supplies of crude oil and petroleum products rose to the highest level, 1.796 billion (×109) barrels, since at least 1982, as far back as the DOE provides weekly data. On top of this, demand continues to wane. For instance, last week the total amount of petroleum products supplied to the market held near post 9/11 lows.
More importantly, runs in the East (PADD I) retreated. In the meantime, the largest refiner in the Northeast, Sunoco, [SUN
Loading...
()
] shuttered a FCC and CDU unit at its Philadelphia refinery due to poor margins. Thus, it appears the table is set for sub-standard runs in PADD I as we approach the start of the U.S. summer driving season (Memorial Day, May 25th). Interestingly enough, while Sunoco was pulling the trigger on the shut-in, the NYMEX 3:2:1 crack spread for June delivery was surging towards the seasonal mean. For example, the Sunoco announcement came out on April 22nd. The NYMEX crack peaked at 121 cents on the dollar to crude oil the day before. Since then the crack has plunged (see above) to around 116 cents on the dollar. A year ago the crack was at 110 cents on the dollar.
Thus, today’s crack market is more attractive than a year ago, but according to Sunoco, not attractive enough.
Gasoline imports plunged last week, down 276 Mbbl/d to 0.84 MMbbl/d. It was the first report in two months where imports came in below the 1.0 MMbbl/d threshold. At the same time refinery utilization plunged, as did gasoline production. This is obviously important. In this vein, we note the sharp flattening in the NYMEX summer RBOB curve.
As we noted in The Schork Report at the beginning of this week… we think a tightening in the contango, regardless of surplus supplies, is normal in the lead up to the season. Thus, it is reasonable to expect this path to continue as we approach the Memorial Day holiday (the start of the U.S. driving season) in the third week of May.
_________________________
Stephen Schork is the Editor of, "The Schork Report" and has more than 17 years experience in physical commodity and derivatives trading, risk systems modeling and structured commodity finance.
Data is a real-time snapshot *Data is delayed at least 15 minutes
