Fuels Market Watch 24

FUEL MARKETS TODAY – Market Overview

Oil prices have slackened again today, after a brief period of recovery. WTI (West Texas Intermediate) crude prices in today’s trading session opened at $71.72/b, down by $0.13 from yesterday’s opening price of $71.85/b. Gasoline and diesel futures prices also opened lower today. Prices appear to be stabilizing, with markets assuming a lessening of geopolitical tension.

The U.S. has sent Secretary of State Mike Pompeo to Saudi Arabia today to discuss the disappearance of writer and Saudi dissident Jamal Khashoggi. Mr. Khashoggi is assumed dead, and Turkish police finally were granted access to the Saudi Arabian Consulate to search for forensic evidence. There is speculation that authorities in Riyadh will state that he was killed accidentally in an unauthorized interrogation. The outcome and the official stance adopted by the U.S. may have a serious impact on the future of foreign direct investment in Saudi Arabia, which is a key to the Kingdom’s “life beyond oil” long-term plan. The Saudi royal family has denied involvement. U.S. President Donald Trump appears willing to accept this, speculating that it may have been “rogue killers.”

With both parties seeming intent on de-escalating diplomatic tension, oil prices have eased as well. The easing of prices is occurring despite news that Iranian crude oil exports appear to be falling more quickly than expected, in advance of sanctions formally coming into effect on November 4th. The markets may have already factored in the loss of these supplies, though upside price risk remains since spare crude production capacity is limited.