Oil Futures Spiked Sunday Night

Oil futures spiked Sunday night when trading resumed as tensions between Saudi Arabia and the US – 2 of the 3 largest oil producers in the world – created concerns for global supplies. Most of those gains have evaporated this morning after a tweet from the US President suggesting cooler heads may prevail.

US drillers put 8 more rigs to work last week according to Baker Hughes’ weekly rig count. The Permian basin accounted for half the move on the week (fitting given that basin accounts for 56% of the total US rig count) as drilling activity nears its highest level in 4 years, to match the 4 year highs in oil prices.

Money managers cut their net-long holdings in WTI to the lowest level of the year last week, reducing bets that oil prices would continue to climb. Brent and ULSD net-length held by the big speculator category were also reduced modestly, while RBOB saw another small increase. Given the data for these COT reports is gathered as of Tuesday – before the big sell-offs we saw on Wednesday and Thursday – it seems likely that we may see a big move lower in these holdings in this week’s report.

Repairs to Enbridge’s natural gas pipeline that had an explosion last week may take weeks, although PNW area refineries seem to be able to continue operations via alternate nat gas supplies. Spot prices for gasoline in the region remain 50 cents above NYMEX futures.

There’s still no definitive word to be found on how long the Irving Oil refinery may be down due to the explosion and fire that shuttered the plant last week, but the lack of reaction in the NYH spot market suggests traders aren’t too worried about an extended outage.

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