Crude and Gasoline Forward Curves

Global crude and gasoline benchmarks remain backwardated.

Being told this morning that NY Harbor cash gasoline is trading 42 cents above October RBOB futures.  I said in August in the WSJ that supplies were expected to remain tight for the next few months. 

"Anybody who needs to purchase gasoline over the next six months, they're locking in prices right now," said Jason Williams, an energy broker at Coquest, a brokerage firm in Dallas. "They are worried that the supply shortages might last for the next three months."

Crude

Gasoline

WTI Forward Curve: Where Abundant Supply Meets Geopolitical Uncertainty

Several of the spreads on the front of the curve are nearing very compelling levels.  And if you're interested in a longer term play on WTI, consider the sloping severity of the back of the curve. 

via 4 Apr Reuters,

Traders said between 20-30 cargoes of Nigerian crude oil were still unsold from the April-May programmes.

"Flow to the States is minimal. Light, sweet is plentiful in the U.S. so there is limited W. African demand," said a West African crude oil trader.

via 4 Apr Reuters,

"There is certainly a discrepancy between futures and cash crude markets," said Olivier Jakob from Petromatrix consultancy. "There is no shortage in the physical market, but there is a lot of uncertainty regarding Iran. If you want to hedge Iranian risk, you do it on the futures market."

"The reality today is that the market is well oversupplied. OPEC production has been rising consistently since September and will probably continue rising further," said Colin Smith, energy strategist at VTB Capital.

"At some point - as happened in 2008 - the markets will take note, perhaps before it shows up in the inventories but certainly as and when it does show up in the inventories," said Smith, whose bank is a top lender to the Russian oil industry.

via 3 Apr Reuters,

Novorossiisk Port

Delays at Russia's main Black Sea port of Novorossiisk due to bad weather continued to crimp supplies in the Mediterranean in contrast with well supplied markets in the Baltic, where Russia opened a new export outlet of Ust-Luga last month.

"The arb between the Baltic and the Med is well open now... Some 300,000 tonnes might have already sailed," a trader with a major said, referring to arbitrage shipments from northern Europe to the Mediterranean where prices are around $1 per barrel higher.

"Everybody is waiting to see if the U.S. and EU will release strategic stocks," said a trader. "Nobody is buying."

via 3 Apr Reuters,

Nabiullina said that Urals blend URL-E crude price forecasts for the following two years have been left unchanged at $97 and $101 respectively, adding that the ministry expects oil prices to decline from current levels.

via 2 Apr Reuters,

"Supply is really ample here. You can see any kind of crude oil you can think of. West African, Caribbean, North Sea and so on," a trader with an oil refiner said.

via 30 Mar Reuters,

"Urals is typically depressed around April-May due to the spring maintenance season. This year you also have extra volumes from Ust-Luga," he added referring to a new Russian Baltic Sea port, which was launched earlier this month.

In the Platts window, Litasco offered a rare 60,000-tonne Siberian Light cargo at dated Brent minus 25 cents loading from port of Tuapse in mid-April, more than $1 per barrel weaker than previous price indications, but could find no buyers.  "A couple of other cargoes are still available and are being offered," one trader said.  Socar offered Azeri Light a dated Brent plus $3.50, slightly weaker than previous price estimates, but found no buyers, traders said.      

via 29 Apr Reuters,

Traders estimated that Glencore, the world's largest publicly listed trader, was set to market up to 10 Urals cargoes in the Baltic in April, a number not seen for many years while the market for Russian crude was dominated by other players. "Glencore is definitely coming back big," one trader with a major oil company said. "I would say they are now sharing leading positions with Shell and Statoil."               

WTI Forward Curve Update & Physical News - 22 Feb 2012

The front 12 months are particularly curious.  Some news clippings this week:

Feb 22, via Reuters:

"Sentiment in the Asia-Pacific crude market firmed on Wednesday, with Australia's Enfield crude expected to fetch double-digit premiums due to tight supplies.

One cargo of April-lifting Enfield, which was delayed from March, being offered and could trade at a record premium above $10 to dated Brent, a trader said.

Premiums for sweet regional crudes for April have risen across the board after Cyclone Iggy disrupted Australian supplies and Sudanese grades remains off the market."

Feb 22, via Reuters:

"Russian Urals crude eased steeply on Wednesday as traders cited a spike in oil futures and expectations of a large loading programme in March as weighing on the export grade of the world's largest oil producer.

"We have yet to fully see a full loading programme for March. But people expect it to be quite good, plus there is a factor of the launch of (a new Baltic port) Ust Luga," one trader with a major said.

In the Platts window, Trafigura offered a March 3-7 cargo of Urals from the Baltic at dated Brent minus 55 cents, some 50 cents lower than price indications earlier this week, traders said.

In the Mediterranean, Eni offered a 80,000-tonne March 3-7 cargo at dated Brent minus 60 cents, some 60-70 cents lower than price indications earlier this week, traders said."

Feb 21, via Reuters:

"URALS * On Monday, Lukoil offered a March 3-7 Urals cargo from Primorsk at dated Brent minus 5 cents, some 20 cents lower than price indications last week.

UST-LUGA * Russia's new Ust-Luga Baltic oil terminal, undergoing repairs after damage caused by multiple landslides, will be ready to start loading crude in the coming weeks and may handle a few cargoes in March, a spokesman for Transneft said."

Feb 20, via Reuters:

"Russian Urals crude eased in the Baltic on Monday as fresh loading dates for March showed healthy supply volumes from the world's largest oil producer."

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WTI Forward Curve: Contango in the front, backwardation beyond December 2012

For anyone curious how to trade the coming whiplash in the curve, see Downey's Oil 101. 

Interactive Broker TWS

FutureSource Workstation

On Backwardation and Forward Curves

WTI and Brent have both shifted to a backwardated curve.

WTI Forward Curve

WTI Forward Prices

Brent Forward Prices

Brent/WTI Spread Forward Curve

Friday Forward Curves: Gold, Silver, Copper, WTI & Brent

Some big moves today.

Nymex Gold

Nymex Silver

Nymex Copper

Nymex WTI

ICE Brent

NYMEX WTI Crude Update

I am by no means a technician or a fibonist.  Draw enough lines on a chart and you can create a reason for a price to go anywhere. Take these with a grain of salt.

NYMEX October, 2011 WTI

NYMEX WTI Weekly Continuation

Today's forward curve (at the moment).

I have previously touched on crude's outright price and more than likely will do so again.  As for predictions, prices will go up and then they will go down (repeat).

Weekly WTI Crude Continuation