Fuels Market Watch 24

FUEL MARKETS TODAY – Market Overview

Oil prices are climbing today. WTI (West Texas Intermediate) crude forward prices opened at $46.90/b today, an increase of $0.64 (1.38%) from yesterday’s opening price of $46.26/b. Gasoline and diesel forward prices also opened higher today. All are moving up this morning. Markets are expected to rise today, based on renewed talks between the U.S. and China on the trade war, plus a very strong U.S. Jobs Report for December.

The oil complex is heading for a week in the black. As of the time of this writing, WTI crude prices are up by $2.86/b (6.3%) for the week. Gasoline prices are up by 7.58 cents/gallon (5.9%.) Diesel prices are up by 12.03 cents/gallon (7.3%.)

Equities markets are expected to be strong today, providing a kinder end to another brutal week. The Dow Jones Industrial Average dropped by 660 points yesterday (2.83%,) but the market has just opened today with a change of +325 points. Markets in Asia and Europe opened earlier with optimism on news of scheduled trade war talks between the U.S. and China. Moreover, the U.S. Jobs Report was just released, and job formation greatly exceeded expectations. The Bureau of Labor Statistics (BLS) reported that nonfarm payroll employment increased by 312,000 in December, well above analyst expectations of 184,000. According to the BLS, “Job gains occurred in health care, food services and drinking places, construction, manufacturing, and retail trade.” The unemployment rate rose, however, climbing to 3.9% from 3.7% in November, as the labor force participation rate rose in December.

Yesterday, oil markets received mixed signals when the American Petroleum Institute (API) released its weekly data on U.S. oil inventories. The API reported a significant drawdown of 4.457 million barrels (mmbbls) from crude oil inventories, but this was more than countered by a whopping addition of 7.995 mmbbls to gasoline inventories plus 3.955 mmbbls to diesel inventories. Market analysts expected a drawdown of around 2.6 mmbbls from crude inventories plus inventory additions of 1.8 mmbbls to gasoline inventories and 0.9 mmbbls to diesel inventories. The Energy Information Administration (EIA) will release official statistics later today. Data releases have been delayed because of the New Year’s holiday.