Crude Prices Test $18/bbl, but Fail and Drift Off Daily Highs

Strategic Insights -

Crude prices on the New York Mercantile Exchange (Nymex) tested $18/bbl, but failed to sustain the momentum, drifting off daily highs due to lack of follow-through buying. The October crude contract settled down 4 cents at $17.82/bbl, after reaching a high of $18.09. The initial uptick in crude was attributed to technically driven buying, but trading volumes thinned and little fundamental news appeared, leading to a lack of sustainability.

Key Takeaways:

  • The October crude contract on Nymex settled down 4 cents at $17.82/bbl after reaching a high of $18.09.
  • The initial uptick in crude was attributed to technically driven buying after Friday's settlement.
  • Trading volumes thinned and little fundamental news appeared, leading to a lack of sustainability in the crude price surge.
  • The small inter-day rally widened the October/November crude spread to 40 cents/bbl in early trading, and it ended the day at 39 cents.
  • The September/October spread averaged $2.05-2.15 in backwardation, sources said.
  • September gasoline wrapped up a weeklong rally, settling down 0.35 cents at 55.62 cents/gallon ahead of its expiration Thursday.
  • Victor Yu, an analyst with New York-based Refco Inc., attributed recent gains in the September gasoline contract to tightness in the New York Harbor physical markets for conventional and reformulated gasoline.
  • Overall gasoline stocks at New York Harbor were drawn down by nearly 3 million bbl for the week ended Aug. 18, and were 4 million bbl behind last year's levels.
  • RFG stocks in the same region were drawn down 1.55 million bbl over the past three weeks to 20.28 million bbl, the American Petroleum Institute said.
  • The short-term bearish trend in the rest of the energy sector proved to be too much for the gasoline contract, a second trader said.

Statistics:

  • Crude prices on the New York Mercantile Exchange (Nymex) tested $18/bbl.
  • The October crude contract on Nymex settled down 4 cents at $17.82/bbl.
  • The October/November crude spread widened to 40 cents/bbl in early trading, and ended the day at 39 cents.
  • The September/October spread averaged $2.05-2.15 in backwardation.
  • September gasoline settled down 0.35 cents at 55.62 cents/gallon ahead of its expiration Thursday.
  • Overall gasoline stocks at New York Harbor were drawn down by nearly 3 million bbl for the week ended Aug. 18.
  • RFG stocks in the same region were drawn down 1.55 million bbl over the past three weeks to 20.28 million bbl.

Sources:

  • American Petroleum Institute
  • Refco Inc.
  • New York Mercantile Exchange (Nymex)
  • London's International Petroleum Exchange (IPE)