Oil Rally Expectations Deflate Despite Storage Draw
(The views and opinions expressed in this article are those of the attributed sources and do not necessarily reflect the position of Rigzone or the author.)
Seemingly bullish data released this week by the U.S. Department of Energy (DOE) data failed to spur an oil market rally. Read on for details in this installment of Rigzone’s review of oil market hits and misses.
Rigzone: What were some market expectations that actually occurred during the past week – and which expectations did not?
Andrew Goldstein, President, Atlas Commodities LLC: As spot prices have come off recent highs, contango has steepened one year out on the curve – from approximately $2.50 to $3.30. Additionally, spot crude has remained in the tight range it’s been in for the past 2 ½ months.
Tom McNulty, Houston-based Principal and Energy Practice leader with Valuescope, Inc.: The NYMEX West Texas Intermediate (WTI) curve (CL) has remained reasonably flat, as most market participants here expected. Oct. 2020 is just above $40 this morning, and Oct. 2021 is trading at about $44 and a half.
Rigzone: What were some market surprises?
Goldstein: With a draw of over 9 million barrels, put by the DOE on Sept. 2, we would have expected the price of spot crude oil to rally. On the contrary, spot price is currently $40.30, off nearly 10 percent from highs over $43 on Sept. 2.
McNulty: Energy Information Administration data shows that the U.S. average regular retail gasoline price going into Labor Day weekend is $2.22 per gallon so far this year, its lowest level in 16 years. My expectation is that it should be rising faster by now as schools open. I see more and more traffic each day here in Texas.
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