Fuels Market Watch 24

FUEL MARKETS TODAY – Market Overview

Oil prices pulled out of their decline today, although by now most of the past month’s gains have been handed back. WTI (West Texas Intermediate) crude prices in today’s trading session opened at $68.68, a drop of $1.35 from yesterday’s opening price of $70.03/b. Current WTI prices are back above $69/b. Gasoline and diesel futures prices also are recovering modestly. However, crude and products appear to be headed for another week in the red.

U.S. stock markets continued to fall yesterday, displaying investor concerns over rising interest rates, the U.S-China trade war, and a hardening of the public stance of the U.S. against Saudi Arabia. President Donald Trump for the first time said that he believes Jamal Khashoggi is dead. While the U.S. will await the conclusion of formal investigations, Treasury Secretary Steven Mnuchin added his name to the list of westerners who will not be attending an upcoming investors conference in Saudi Arabia, known as “Davos in the Desert.”

Most Asian stock markets fell. China’s GDP data for the third quarter was released, posted at 6.5%, down from 6.7% in the prior quarter. Initially, this sent Chinese stocks down, but China quickly moved to staunch this. Three top Chinese financial regulators, The People’s Bank of China, The Securities Regulatory Commission, and the Banking and Insurance Regulatory Commission all issued statements reassuring investors about the health of the Chinese economy.

The U.S.-China trade war reportedly has eliminated Chinese imports of crude oil from the U.S., which had been on a meteoric rise. In 2016, China imported approximately 22 thousand barrels per day (kbpd) of crude from the U.S. This shot up by nearly a factor of 10 in 2017, averaging 221 kbpd. Imports continued to rise in 2018, hitting a peak monthly rate of 510 kbpd in June (23% of total U.S. crude exports.) This was reduced to 384 kbpd in July, and now reportedly has been cut entirely. In its stead, there are reports that a massive amount of Iranian crude oil is headed for China, to arrive before the sanctions come into force on November 4th.