Fuels Market Watch 24

Exclusive daily fuels market analysis by Dr. Nancy Yamaguchi.

FUEL MARKETS TODAY – Market Overview

Crude oil futures prices are recovering today. Prices plummeted Monday when President Trump tweeted that oil prices were “too high.” However, the OPEC+ group reaffirmed their commitment to the production cut agreement, and prices are heading back up. WTI (West Texas Intermediate) crude forward prices opened at $55.95/b today, up by $0.49 (0.88%) from yesterday’s opening price of $55.46/b. Gasoline and diesel futures prices also recovered significantly at today’s market opening, and their price levels also are trending back up. Global market optimism today may be limited by heightened tension between India and Pakistan.

The oil complex ended last week with significant gains: WTI crude was up by $1.48 (2.7%) for the week; gasoline was up by 3.84 cents (2.4%;) and diesel was up by 0.97 cents (0.5%.) President Trump’s tweet about oil prices being “too high” caused a selloff that erased the gains.

The OPEC+ group did not respond by raising output to satisfy President Trump’s desire for cheaper oil. Instead, oil prices began to recover rapidly when Saudi Arabian Energy Minister Khalid al-Falih reaffirmed commitment to the OPEC+ production cut agreement. He also noted that the group would extend the cuts into the second half of 2019 if needed. Minister al-Falih believes that demand will pick up in the second half of the year, further tightening the supply-demand balance. Saudi Arabia, as usual, is shouldering most of the responsibility for cutting production. Russia is also working to reduce output. Russia’s Energy Minister says the country is reducing output by 140,000-150,000 bpd from December levels, and that they will reach their targeted production cut of 228,000 bpd from the October level by March or April.

Oil prices also received support by news from the American Petroleum Institute (API.) The API reported that U.S., crude oil inventories fell by 4.2 million barrels (mmbbls) during the week ended February 22nd. Gasoline inventories were estimated to have fallen by 3.8 mmbbls, and diesel inventories rose by 0.4 mmbbls. The Energy Information Administration (EIA) will release official statistics later today.

GASOLINE

Gasoline opened on the NYMEX at $1.5985/gallon today, up by 4.89 cents (3.06%) from yesterday’s opening price of $1.5496 cents/gallon. Prices last week were the highest since mid-November, but prices subsided to their pre-rally levels on Monday, and have been recovering since then. Over the past 24 hours from 9AM EST to 9AM EST, gasoline prices recovered by 4.79 cents (3.06%.) Gasoline forward prices currently are continuing to recover, trading between $1.59-$1.61/gallon. The latest price is $1.6059/gallon.

 
DIESEL

Diesel opened on the NYMEX at $2.0084/gallon today, up by 3.16 cents (1.57%) from yesterday’s opening price of $1.9768/gallon. Until last week, diesel forward prices had not been steadily above the $2/gallon level since mid-November. Over the past 24 hours from 9AM EST to 9AM EST, diesel prices recovered by 3.06 cents (1.54%.) Diesel prices currently have regained the territory above $2/gallon, and prices are in the range of $2.00-$2.02/gallon. The latest price is $2.0133/gallon.

 
WEST TEXAS INTERMEDIATE

WTI (West Texas Intermediate) crude forward prices opened at $55.95/b today, up by $0.49 (0.88%) from yesterday’s opening price of $55.46/b. Prices had been hitting highs of over $57.50/b on Monday before plunging nearly as low as $55/b. Over the past 24 hours from 9AM EST to 9AM EST, WTI crude prices recovered by $1.07 (1.93%.) Currently, crude prices are trending up, trading in the range of $56.00/b-$56.75/b. The latest price is $56.64/b.