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A shadow hangs over expiring WTI

Published Tuesday, July 22nd, 2014

Stock markets took a breather as the United Nations Security Council passed a resolution demanding those responsible for the downing of the Malaysian airliner “be held to account and that all states cooperate fully with efforts to establish accountability”. Major US stock market indices shed around a quarter of a percent of their value also aided by the escalation of violence in the Gaza Strip.

Oil chose to go down the opposite path with the main futures contracts all gaining on the day led by WTI. The August contract that expires today settled $1.46/bbl higher whilst Brent closed 44 cents/bbl up. Heating Oil was 136 points stronger on the day and RBOB did not lag far behind WTI with a daily gain of 311 points.

The August/September WTI spread that settled at 43 cents/bbl a week ago closed at $1.43/bbl yesterday and is printing $1.90/bbl at the time of writing. One cannot help but think that this strength is related to today’s expiry. With Cushing stocks already low this week’s report on US oil stocks that covers the week ending July 18 could easily push crude oil inventories below the 20 million bbls mark.

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Posted by Tamas Varga

Tamas Varga has been in the oil industry since 1992 and with PVM for 18 years. During his time in the industry he has gathered a range of experience in the oil markets. At PVM Tamas is in charge of data collection and analysis.