WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL June 11th, 2018

WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL June 11th, 2018

by Joseph Rokop

Oil prices rallied slightly higher on Monday, getting a boost from supply disruptions in Iran and Venezuela. Crude initially broke overnight due to an increase in output from Saudi Arabia, but recovered it’s losses over the course of the pit-session to finish in the black.

The front month WTI July contract rallied 36 cents on Monday, settling at 66.10. The front month Brent August  contract traded flat on the day, with no change, settling at 76.46. The WTI/Brent arb remains ballooned, settling at 10.36 per barrel.

Oil’s fall from it’s multi-year highs is on pause, as traders await the outcome of OPEC’s next meeting on June 22 in Vienna. Last week, oil bottomed out near 64.25, and has been unable to fall any lower as most fundamental and technical indicators are neutral to slightly bullish.

The RB July and HO July contracts has also paused, settling at 2.10 and 2.16 respectively. Crude product fundamentals still remain strong as demand for gasoline and diesel fuel remains healthy.

As we turn the corner into a new week, here’s an inside look:




WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL June 4th, 2018

WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL June 4th, 2018

by Joseph Rokop

Oil prices continued to drop Monday, as the U.S. benchmark settled at two-month lows, pulled down by renewed expectations that OPEC and Russia will curb production cuts when they meet later this June.

The front month WTI July contract broke 106 cents on Monday, settling at 64.75. The front month Brent August  contract also broke 150 cents, settling at 75.29. The WTI/Brent arb has blown out in recent weeks, ballooning to minus 11.02 per barrel on Friday, settling at 10.51 per barrel today.

Oil’s multi-year rally was abruptly halted last week, when Saudi Arabia’s’ Energy Minister, Khalid al Falih, and Russia’s Oil Minister, Alexander Novak, said they were prepared to raise the OPEC-led production cuts by 1 million barrels per day (1M bpd).

The RB July and HO July contracts have also pulled back from three-year highs, settling at 2.12 and 2.15 respectively. Crude product fundamentals remain strong, however, suggesting their direct correlation with crude will start to dissipate in the coming summer months. RB is down 16c from its high at 2.28, while HO is down 16c from its high of 2.31.

As we turn the corner into a new week, here’s an inside look:



WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL May 7th, 2018

WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL May 7th, 2018

by Joseph Rokop

Oil prices climbed higher on Monday, settling above seventy dollars per barrel for the first time since 2014, as traders bet that the U.S. would re-impose economic sanctions on Iran. Crude retreated in electronic trading, after President Donald Trump announced he’d be making his decision regarding the deal on Tuesday, four days ahead of schedule.

The front month WTI June contract rallied 101 cents on Monday, settling at 70.73. The front month Brent July contract also rallied, up 130 cents, settling at 76.17. Both contracts rallied to three and a half-year highs.

Oil’s multi-year rally has been spurred by a multitude of factors: the OPEC/non-OPEC crude production cuts, an increase in global demand, the potential reinstatement of Iranian economic sanctions, and Venezuela’s political instability.

As we turn the corner into a new week, here’s an inside look:


WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL April 23rd, 2018

WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL April 23rd, 2018

by Joseph Rokop

Oil prices bounced higher on Monday, after an overnight break, to finish the day in the black, as tensions in the Middle East were stoked by reports that a Saudi-led airstrike in Yemen killed the head of the Houthi rebels, raising concerns for further oil supply disruptions in the Middle East.

The new front month WTI June contract rallied 24 cents on Monday, settling at 68.64 with a high of 69.03 and a low of 67.13. The front month Brent June contract also rallied, up 65 cents, settling at 74.71. Brent broke the psychological benchmark 75 handle with a high of 75.11.

Despite the fact that the Saudi and Houthi conflict has received less press than Syrian and Russian headlines, tension between Saudi Arabia and the Houthi rebels has been supporting crude prices for the past two-weeks.

As we turn the corner into a new week, here’s an inside look:


WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL April 9th, 2018

WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL April 9th, 2018

by Joseph Rokop

Oil prices rebounded Monday, settling sharply higher, as crude rallied to recover the majority of last week’s losses. Oil rallied on the back of the stock market, as economic tensions between China and the U.S. eased, sending equities higher. Meanwhile, in the Middle East, geopolitical tensions increased, spurring concerns for an oil supply disruption out of Syria.

The front month WTI May contract rallied on Monday, up 136 cents, settling at 63.42. The front month Brent June contract also rallied, up 154 cents, settling at 68.65.

As President Trump’s administration softened their tone on the prospect of an escalated trade war with China, both the crude and equities market saw a nice relief rally to start the week,.

The hardline stance of new tariffs on China was walked back, as White House economic advisor Larry Kudlow stated, “I don’t know whether we’re going to have tariffs or not.” This change in policy rhetoric was risk-on for traders as they covered shorts and entered back into long positions.

As we turn the corner into a new week, here’s an inside look:

WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL April 2nd, 2018

WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL April 2nd, 2018

by Joseph Rokop

Oil prices dropped over three percent to start the quarter Monday, pressured by continued trade problems between China and the United States, a large drop in the stock market, a steady U.S. dollar, a surprise rise in Russian oil production, and expectations that Saudi Arabia will lower crude prices in Asia.

The front month WTI May contract broke hard Monday, down 193 cents, settling at 63.01. The new front month Brent June contract also broke hard, down 170 cents, settling 67.64. After a bullish first quarter, hedge funds and money managers looked to flatten long Q1 positions, instigating a Q2 selloff.

Economic tensions rose on Monday, as the Chinese government increased tariffs by up to 25 percent on 125 U.S. products. Investors see these trade policies as bearish due to the perceived geopolitical instability. The stock market proceeded to break, and was broad-based, as all 11 sectors of the S&P 500 dropped, with 8 of them dropping over 2 percent on the day.

As we turn the corner into a new week, here’s an inside look:

WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL March 26th, 2018

WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL March 26th, 2018

by Joseph Rokop

Oil prices hit six-week highs last week, nearly topping the three-year high printed in late January. Oil rallied on a surprise draw in U.S. crude inventories, a strong compliance rate for OPEC cuts, and continued concerns on the Iran nuclear deal.

The front month WTI May contract traded sideways on Monday, down 33 cents, settling at 65.55. The WTI is up 349 cents from this time last week. The front month Brent June contract also traded sideways, settling at 70.12. Brent is up 407 cents on the week. Speculative length continues to climb as money managers have increased their long positions in both WTI and brent. Speculators are holding 704 million barrels in WTI futures and options, and 395M bbls in Brent futures and options.

The U.S. Dollar Index, (DXM8) trading 88.96, continues to fall this year, trading well below the key psychological and technical support level at 90.00. On Wednesday, the U.S. Federal Reserve raised interest rates and forecasted at least two more hikes in 2018, putting even more pressure on the dollar. The greenback’s inverse correlation with crude has significantly supported oil prices as a falling U.S. dollar makes commodities cheaper for holders of other currencies.

The RB May and HO May contracts also rallied alongside crude last week, both settling at 2.02 on Monday. As mentioned in Edify’s last outlook, with heating season coming to an end, and driving season around the corner, look for RBOB to lead the complex higher into new three-year highs.

As we turn the corner into a new week, here’s an inside look:

WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL February 26th, 2018

WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL February 26th, 2018

by Joseph Rokop

Oil prices trekked higher Monday, following their second straight weekly gain. The crude complex rallied alongside the stock market with support from a weak dollar, bullish comments from OPEC, a supply outage in Libya, and draws in U.S. stockpiles.

The front month WTI April contract settled at 63.91 on Monday, up 223 cents, or 3.5 percent from this time last week. The front month Brent April contract settled at 67.50, up 266 cents, or 3.9 percent. The WTI/Brent arb has rallied 250 cents this year, as bullish bets on the WTI have been ramping up, with hedge funds and money managers holding 478,160 long contracts in futures and options.

The U.S. Dollar Index, (DXH8) trading 89.90, continues to fall this year, breaking below a key psychological and technical support level at 90.00. The greenback’s inverse correlation with crude has significantly supported oil prices, as dollar denominated commodities are cheaper for foreign investors.

The RB April and HO April contracts also rallied alongside crude, settling at 2.00 and 1.99 on Monday. With heating season coming to an end, and driving season around the corner, RBOB is leading the complex higher, now trading at three-year highs.

As we turn the corner into a new week, here’s an inside look:

WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL February 12th, 2018

WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL February 12th, 2018

by Joseph Rokop

Oil prices settled markedly lower on Friday, following another volatile week of trading. U.S. oil has fallen over 11 percent from this year’s high in late January. Across the pond, Brent oil fell 9 percent on the week trailing the WTI.

Crude dropped last week on the resurgence of the U.S. dollar, a moderate increase in U.S. production, and most notably, a substantial break in the stock market.

The front month WTI March contract settled at 59.20 on Friday, down 195 cents, or 3.2 percent, with an intraday low of 58.07. The  new front month Brent April contract settled at 62.79, down 202 cents, or 3.1 percent. Brent posted its lowest settle since December 13th last year.

The U.S. Dollar Index, (DXH8), recently bounced back to 90.22 after making new three-year lows earlier this month. The greenback now sits comfortably above a strong technical, and psychological, support level at 90.00. The crude market moves inversely with the dollar, a correlation that recently established itself this past December.

The RB March and HO March contracts also broke hard alongside crude, settling at 1.70 and 1.86 on Friday. Both contracts have come off two and a half-year highs, down 9.7 and 9.2 percent week over week.

As we turn the corner into next week, here’s an inside look:

WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL January 29th, 2018

WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL January 29th, 2018

by Joseph Rokop

Oil prices settled higher on Friday, following another volatile week of trading after hitting new three-year highs earlier in the week. A soft U.S. dollar boosted prices, with crude posting another weekly gain, despite an increase in U.S. production.

The front month WTI March contract settled at 66.14 on Friday, up 63 cents on the day with an intraday high of 66.35. The Brent March contract settled at 70.70, up 28 cents on the day. Both contracts sit just below their three-year highs of 66.66 and 71.28.

The U.S. Dollar Index, (DXH8), broke even further last week to a new three-year low of 89.011. The greenback whipsawed on seemingly conflicting comments from U.S. Secretary Steve Mnuchin and President Donald Trump.

The RB March and HO March contracts also rallied hard, week over week, settling at 1.94 and 2.14. Both contracts sit at two and a half-year highs.

As we turn the corner into next week, here’s an inside look:

WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL January 22nd, 2018

WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL January 22nd, 2018

by Joseph Rokop

Oil prices settled higher on Monday following a volatile day of trading due to a choppy U.S. dollar, the restart of Libyan oil fields, and comments from the Saudi Arabian energy minister.  

The new front month WTI March contract settled at 63.57 on Monday, up 26 cents on the day with an intraday high of 64.13. The Brent March contract settled at 69.03, up 42 cents on the day. Both contracts sit just below three-year highs.

The U.S. Dollar Index, (DXH8), broke to new three-year lows to start the day due to last week’s U.S. government shutdown. As the day wore on, the greenback recovered some of its’ losses when a continuing resolution passed in the Republican-led House to temporarily fund the federal government.

The RB March and HO March contracts also traded in a wide volatile range Monday, settling 1.88 and 2.06.

U.S. crude stocks continue to fall, dropping by a surprise -6.9 million barrels (-6.9M bbl) last week vs an expected draw of -3.5M bbls (EIA). Distillates also posted a surprise draw of -3.9M bbls vs an expected build of +0.1M bbls. Curiously, these big misses were not able to propel crude to new highs. RBOB, or U.S. gasoline, was a non-factor.

As we turn the corner into the remainder of the week, here’s an inside look:

WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL January 15th, 2018

WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL January 15th, 2018

by Joseph Rokop

U.S. oil prices settled higher for the fifth straight session on Friday amid optimism that OPEC-led cuts will slowly drain the world’s oil supply, thus, rebalancing the crude fundamental suite.

The WTI February contract settled at 64.30 on Friday, up 50 cents on the day. Due to MLK Day on Monday, the Nymex was closed here in the states, but in electronic trading, crude finished 51 cents higher to close the day at 64.81.

The Brent March contract settled at 69.87 on Friday, up 61 cents on the day. Like the WTI, Brent also rallied in electronic trading Monday, topping 70 dollars per barrel with an intraday high of 70.37. This recent rally marks the first time the front month Brent contract has been above the 70 dollar mark since December 2014.

The Brent/WTI front month arb has narrowed since the start of the year, as traders shrug off higher U.S. production numbers. The arb now sits at -5.55.

The RB February contract continues to rally hard, settling at 1.85 on Friday, finishing over 1.87 Monday. The HO February contract also rallied, settling at 2.09, finishing over 2.10 Monday.

As we turn the corner into the remainder of the week, here’s an inside look:

WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL January 4th, 2018

WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL January 4th, 2018

by Joseph Rokop

U.S. oil prices settled above 60 dollars per barrel last week, closing 2017 at new two and a half year highs. The WTI posted a 12 percent gain on the year, boosted by a moderate decrease in global supply and healthy increase in demand.

Brent crude, the global benchmark, posted a 17 percent gain on the year, spurred by supply cuts led by OPEC and Russia, along with an increase in Chinese demand.

The WTI February contract settled at 61.95 on Thursday, while the Brent March contract settled at 67.80. The Brent/WTI front month arb widened significantly last year, as Brent crude rallied harder on OPEC cuts as the WTI lagged behind due to an increase in U.S. production. The arb closed at 6.10, 115 cents off its yearly high of 7.25.

The RB February  contract rallied hard this year, settling at 1.80 on Thursday, with a yearly high of 1.86. The HO February contract also rallied, settling at 2.07, posting a new two and a half year high of 2.08.

According to (EIA), U.S. crude stocks decreased by a surprise -7.4 million barrels (-7.4M bbl) vs an expected draw of -5.1M bbls. The bullish crude draw was temporarily trumped by a large build in gasoline stocks of +4.8M bbls vs an expected build of +2.1M bbls.

Heating oil, or diesel stocks, also put a damper on the crude rally with a massive +8.9M bbl build vs an expected build of 2.2M bbl.

 

As we turn the corner into the week ahead, here’s an inside look:

WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL December 11th, 2017

WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL December 11th, 2017

by Joseph Rokop

U.S. Oil prices settled down roughly 1.7 percent last week, posting its largest weekly drop in two months. Traders fear that soaring U.S. output will undermine the efforts led by OPEC and Russia to tighten global production and bring the crude market into balance.

Crude futures rebounded slightly Friday, as traders eyed the supply and demand figures coming out of China, as well as the threat of a strike by a major Nigerian oil union.

The WTI January contract settled at 57.36 on Monday, up 67 cents on the day. In London, the new front month Brent February contract settled at 63.40, outpacing U.S. crude, up 120 cents on the day. The Brent/WTI front month arb expanded, with Brent trading at a 6.04 premium to the WTI.

The RB January contract rallied alongside crude, up 1.5 cents on the day, settling at 1.72. The HO January also popped, up 3 cents on the day, settling at 1.93.

According to the Energy Information Administration (EIA), U.S. crude stocks decreased by a surprise -5.6 million barrels (-5.6M bbl) versus an expected draw of -3.4M bbls. The bullish crude draw was trumped by a large build in RBOB of +6.8M bbls vs an expected build of +1.7M bbls. Heating oil, or diesel stocks, slightly exceeded expectations with a small build of +1.7M bbls.

As we turn the corner into the week ahead, here’s an inside look:

WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL December 5th, 2017

WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL December 5th, 2017

by Joseph Rokop

Oil prices fell one percent on Monday as traders took profits following last week’s decision by OPEC and other users to extend production cuts. The rise of  the U.S. dollar and an uptick in U.S. drilling activity also weighed on prices.

The WTI January contract settled at 57.47 on Monday, down 89 cents on the day. In London, the new front month Brent February contract settled at 62.45, outpacing U.S. crude, down 128 cents on the day. The Brent/WTI front month arb has eased the past two weeks, with Brent trading at a 4.92 premium to the WTI.

The RB January contract broke hard, breaking 5 cents on the day, settling at 1.69. The HO January also weighed heavily on price, breaking 5 cents on the day and settling at 1.89.

According to the Energy Information Administration (EIA), U.S. crude stocks decreased by a moderate 3.4 million barrels (-3.4M bbl) last week while distillate and gasoline stockpiles both increased. RBOB stocks posted an expected seasonal build of 3.6M bbl while diesel stocks posted an unexpected build of +3.6M bbl.

As we turn the corner into the week ahead, here’s an inside look:

WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL November 6th, 2017

WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL November 6th, 2017

by Joseph Rokop

Oil skyrocketed again on Monday, marking the largest daily rally in nearly a year, as traders weighed concerns over the “stabilization” of the Middle East. Saudi Arabia’s Crown Prince Mohammad bin Salman launched an anti-corruption campaign leading to the arrest of many prominent princes, businessmen and government ministers in the Kingdom.

The WTI December contract settled at 57.35 on Monday, up 1.71 cents on the day, marking the highest settle since June of 2015. In London, the Brent January contract settled at 64.27, outpacing U.S. crude, up 220 cents on the day. The Brent/WTI front month arb continues to expand, pushing new lows, with Brent trading at a 6.86 premium to the WTI.

The RB December contract supported crude prices, rallying 3.5 cents on the day, settling at 1.83. The HO December also boosted prices, rallying 5.5 cents on the day to settle at 1.94.

The crude market has unarguably turned bullish these past few weeks, as basic supply and demand laws push up prices. As demand rises, and U.S. production drops, we have seen shrinking U.S. stockpiles. Combine these factors with increased tensions in the Middle East, and a likely production cut extension (led by OPEC), and the fundamental and geopolitcal picture looks promising.

As we turn the corner into the week ahead, here’s an inside look:

WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL October 30th, 2017

WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL October 30th, 2017

by Joseph Rokop

Oil futures jumped 2 percent on Friday, as the global benchmark Brent crude rallied through the 60 dollar per barrel level amid expectations that the OPEC and non-OPEC oil producing nations will extend a deal to trim global crude supply through the end of 2018.

After talks between Saudi Arabian Crown Prince Mohammad Bin Salam and Russian President Vladimir Putin, Saudi Arabia, the defacto leader of the oil cartel, and Russia, the world’s second highest oil producing nation, released similar statements stating that both nations are strongly in favor of extending the agreement to cut oil production by 1.72 million barrels per day by nine additional months.

The WTI December contract settled at 53.98 on Friday, up 126 cents on the day and 4.7 percent on the week. In London, the Brent December contract settled at 60.44, up 114 cents on the day and 4.6 percent on the week. The Brent/WTI expanded, reaching new lows, with Brent trading at a 6.54 premium to the WTI.

The RB December contract supported crude prices, rallying 10 cents on the week, settling at 1.72. The HO December also boosted prices, rallying 10 cents on the week to settle at 1.87.

As we turn the corner into the week ahead, here’s an inside look:

WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL October 23rd, 2017

WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL October 23rd, 2017

by Joseph Rokop

U.S. oil futures were little changed to open the week on Monday after a tight and choppy week of trading. Prices stabilized above the psychological benchmark of 50 dollars per barrel for the third straight week.

The WTI December contract settled at 51.90 on Monday, up 18 cents on the day and 3 cents on the week. In London, the Brent December contract settled at 57.37, down 38 cents on the day and 45 cents on the week. The Brent/WTI arb has started to narrow, with Brent trading at a 5.51 premium to the WTI.

The RB December contract supported crude prices, up 4 cents on the week, settling at 1.640. The HO December remained steady, trading around 1.800.

According to the Energy Information Administration (EIA), U.S. crude stocks fell 5.7 million barrels (-5.7M bbl) last week temporarily holding up crude. The mild draw in crude was unable to sustain higher prices due to a surprising drop in U.S. refining rates and and unexpected build in fuel stocks, indicating a decline in U.S. demand.

As we turn the corner into the week ahead, here’s an inside look:

WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL October 9th, 2017

WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL October 9th, 2017

by Joseph Rokop

U.S. oil futures tumbled last week, breaking over three and half dollars, or 4.6 percent, as traders focused on the implications of Hurricane Nate and its potential disruption to refining capacity and crude production in the Gulf of Mexico.

The Bureau of Safety and Environmental Enforcement, or the BSEE, estimated over 90 percent of Gulf Coast production was taken offline this weekend in preparation for Hurricane Nate.

The WTI November contract settled at 49.22 on Friday, down 1.50 on the day. In London, the Brent November contract settled at 55.62, down 1.38 on the day. Brent’s decline snapped a five-week winning streak, the longest since June of 216. The Brent/WTI arb has continues to widen, with Brent trading at 6.22 premium to the WTI.

The RB November contract was unchanged settling at 1.559 and the HO November settled down 2.3 cents at 1.744. Crude meandered back up 25 cents on Columbus Day, as traders awaited the market re-open post holiday.

As we turn the corner into the week ahead, here’s an inside look:

WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL October 2nd, 2017

WEEKLY OUTLOOK BY EDIFY TRADING - CRUDE OIL October 2nd, 2017

by Joseph Rokop

Oil futures fell over two percent Monday on strong signs of higher global output due to an increase in OPEC production and U.S. drilling efforts. Last weeks inflated prices were unable to hold on to start the month.

According to Baker Hughes, U.S. drillers added 6 oil rigs last week, bringing the number of active oil rigs in North America up to 750, as shale players looked to take advantage of inflated prices.

OPEC production increased by 150,000 barrels per day (150K bpd) to 32.7M bpd, led by Iraq and Libya, while Iraqi exports also rose (reported by Reuters).

The WTI November contract settled at 50.58 on Monday, down 2.28 from last week’s high of 52.86. In London, the Brent November contract settled at 56.12, down 3.37 from last week’s high of 59.49. The Brent contract now trades at a 5.54 dollar premium to WTI.

The RB November contract settled down 3.5 cents at 1.555 and the HO November settled down 4.5 cents at 1.767.

Inventory numbers were mixed last week, as crude posted an unexpected draw of 1.9 million barrels while gasoline and diesel stocks were a wash.

As we turn the corner into the week ahead, here’s an inside look:

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