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Refined Products

Recap:  Oil prices rose on Monday after Saudi Arabia’s oil minister stated his country would look to curtail exports along with already cutting back on output. Prices opened the session with an extension of Friday’s losses, falling to their lowest level in just over a week. Losses were reversed, however, on reports that OPEC was looking to take additional steps to prop up prices. September WTI gained 57 cents, or 1.25%, to settle at $46.34 a barrel, while Brent for September delivery finished at $48.60 a barrel, up 54 cents, or 1.12%.

August RBOB fell just over half a cent to $1.557 a gallon, while August heating oil rose less than half a penny to $1.517 a gallon.

Fundamental News:  A ministerial committee of OPEC and non-OPEC producers, including Saudi Arabia, Kuwait, Venezuela, Algeria, Russia and Oman, that monitor the output cut agreement said it had agreed Nigeria would join the deal by capping or even cutting its output from 1.8 million bpd, once it stabilizes at that level from its current level of 1.7 million bpd.  The monitoring committee, known as JMMC, did not give the timeframe for when this would happen, saying it would track Nigerian production patterns in the next weeks.  The committee did not support limiting Libya’s output as it said its production was unlikely to exceed 1 million bpd in the near future compared with its capacity of 1.4-1.6 million bpd before unrest erupted in 2011.

Saudi Arabia’s Energy Minister, Khalid Al-Falih, emphasized its commitment to eliminating the global oversupply, promising deep cuts to exports next month following a meeting with fellow producers in St. Petersburg, Russia.  He said shipments from Saudi Arabia will be capped at 6.6 million bpd in August, 1 million bpd lower than a year earlier.  He pushed for an improvement in the implementation of the production cuts from the countries already participating in the deal.  He said Nigeria and Libya will be allowed to increase output to their targeted levels but added that both countries will struggle to achieve that. 

Kuwait’s Oil Minister, Issam Almarzooq said the country has urged OPEC and non-OPEC members to redouble and focus its efforts.  He said compliance with the oil production cuts is unprecedented but high oil supply from North America complicates market rebalancing.  He said compliance by OPEC and non-OPEC countries was over 90% in June. 

Oman’s Oil Minister, Mohammed bin Hamad Al-Rumhy said Nigeria is willing to cut its output from 1.8 million bpd if that level is reached and sustained.  He said an OPEC and non-OPEC joint output monitoring committee had recommended an agreement with Nigeria to limit the country’s output at 1.8 million bpd. 

Russia’s Energy Minister, Alexander Novak, said an OPEC and non-OPEC committee had recommended extending oil production cuts beyond the first quarter of 2018, if needed.  He also stated that Libya and Nigeria might participate in the agreement between OPEC, Russia and other producers to rebalance the oil market once their own output stabilizes.  He said the two countries were approaching the moment when their output should be capped due to significant rises in recent months. 

OPEC Secretary General, Mohammed Barkindo, said market rebalancing would accelerate as demand would increase in the second half of the year.

IIR reported that US oil refiners are estimated to shut in 107,000 bpd of capacity in the week ending July 28th, leaving available refining capacity unchanged from the previous week.  IIR expects offline capacity to fell to 101,000 bpd in the week ending August 4th. 

Early Market Call - as of 9:00 AM EDT

WTI - Aug  $47.25, up 91 cents

RBOB - Aug $1.5668, up 99 cents

HO -Aug $1.5385, up 2.15 cents

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Natural Gas

Monday, July 24th, saw the front-month NYMEX Natural Gas Futures Contracts open at $2.947, two cents below Friday’s closing price of $2.970.  Losing two cents as markets opened, a staggered ascent to the intraday high of $2.955 by 9:50AM was dampened by cooler forecasts covering much of the northeast.  Trailing downward to cross midday near the $2.90 level, prices stabilized until 1:00PM as the contract retreated further.  Recording to a two-week intraday low of $2.880 at 2:10PM, August closed lower on Monday at $2.899.

This morning in Globex, WTI Crude was up 78 cents; Natural Gas was up four cents; Heating Oil was up two cents; and, Gasoline was up one cent.  Additionally, cash prices were lower in New York and New England.


Natural Gas Glossary

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