Today’s Market Trend

Analysis by Dr. Nancy Yamaguchi

WTI crude prices are in the $52.00/b-$52.50/b range this morning. WTI opened at $52.55/b today, a drop of $0.50, or 0.94%, from Friday’s opening price. Last week, WTI closed in the red, dropping from $53.75 at Monday’s opening to $52.37 at Friday’s close. Current prices are $52.51/b, $0.03 below opening.

News may be limited today, with some business closed in observation of Martin Luther King Day. Prices currently appear stable with a slight downward tilt.

Friday, Baker Hughes reported that the U.S. active rig count fell for the first time since the week ended November 11, 2016, when the rig count fell by only 1. Before that, the rig count had increased for seven consecutive weeks. For the current week ended January 13th, the rig count fell by a more substantial 6 rigs. At a current count of 659, the rig count is almost back to where it was in the first week of 2016 (664). U.S. producers have been positioning themselves to capitalize on stronger prices in the new year. The presence of so many producers in the U.S. has had a moderating influence on prices. It is possible that the trend toward rig activation is now slowing, and that a sustained demonstration of price strength above $52/b will be needed. The EIA released its Short-Term Energy Outlook last week, which forecast WTI prices to average $52/b in 2017. The decline in U.S crude production halted and reversed in the second half of 2016, and domestic supplies are forecast to grow this year.

The news from OPEC was bullish last week, with Saudi Arabia reporting that it had already cut production below 10 million barrels per day, and that it would reduce output even further in February. Kuwait reported that it had reduced output slightly more than its targeted cuts of 131 kbpd. Iraq reported that it had achieved the majority of the cuts it had pledged, cutting its exports by 170 kbpd already and planning to cut the additional 40 kbpd, which would fulfill its pledge of 210 kbpd.

Distillate opened at $1.6526/gallon in today’s session. This was 2.32 cents below Friday’s opening price. Current prices are $1.6532/gallon, up by 0.18 cents from Friday’s closing.

RBOB opened at $1.6287/gallon today, down 0.70 cents from Friday’s opening. Prices have come back to $1.6112/gallon today, roughly unchanged from Friday’s close.