Oil N' Gold - Resources for Serious Traders
Oil N' Gold Focus Reports
Weekly Fundamentals - Oil Prices Rebounded as Brexit Concerns Eased a Bit Print E-mail
ONG Focus | Insights | Written by Oil N' Gold | Sun Jun 19 16 06:18 ET

Similar to others in the financial market, movement of energy prices over the past week was driven by Brexit concerns. Both the front-month WTI and Brent crude contracts weakened most of the time last week as polls showed that supports for "leaving" EU was leading. Things began to reverse as pro-EU British MP Jo Cox was shot to death. The WTI crude contract rebounded +3.83% while the Brent contract jumped +4.2% last Friday, the day after the murder. Look at the rolling Brexit polls, the latest poll by Survation revealed that support for the "remain" camp rose to 45% on June 18, 2 days after the murder, from 42% on June 15, whilst support for the "leave" camp dropped to 42% from 45%. That is the "remain" camp is leading the "leave" camp by +3% in the latest poll. Meanwhile, the latest polls by Yougov showed that support for the "remain" camp rose to 42% on June 17, the day after the murder, from 39% on June 13, whilst support for the "leave" camp dropped to 44% from 46%. Support for the "leave" camp has narrowed after the murder in this poll. Easing concerns for the UK leaving the EU lifted market sentiment in general and high-risk assets such as energies gained. Besides crude oil, fuel prices also gained Friday with heating oil and RBOB gasoline prices soaring +4.13% and +2.73% respectively. Note, however, that the energy complex still reported losses on weekly basis.

Fundamentals of the oil market have improved recently, driven by US driving season. Crude oil, at an 11-week low of 531.5 mmb, inventory has been declining since mid-May. Gasoline demand also rose to record high of 9.76M bpd last week. In EIA's short term energy report released on June 7, the agency estimated that, during the April-through-September summer driving season of 2016, the country's regular gasoline retail prices to average at US$2.27/gallon, up +6 cents/gal from previous month's forecast but down -36 cents/gal from the last summer. Prices are expected to drop average at US$2.13/gal in 2016 and US$2.27/gal in 2017, both were revised higher from previous forecasts.

Nymex natural gas price rose more than +2% to the highest level in 9 months last week. The market speculated that demand would increase in summer. The DOE/EIA reported that natural gas stockpile rose +69 bcf to 3 041 bcf in the week ended June 10. Stocks were +633 bcf higher than the period last year and +704 bcf above the five-year average of 2 337 bcf. Separately, Bakers Hughes estimated that that the number of gas rigs gained +1 unit to 86 in the week ended June 10. In terms of drilling types, directional rigs stayed unchanged at 45 units, horizontal rigs gained +3 units to 326 and vertical rigs added +7 units to 53. Together with a +9 units in oil rigs, the total number of rigs gained +10 units to 424 units.


Latest Analysis from this Author