Fuels Market Watch 24

FUEL MARKETS TODAY – Market Overview

Oil prices are trending up this morning, trading in the range of $74.25-$74.75/b. WTI (West Texas Intermediate) crude prices in today’s trading session opened at $74.21/b, down by $0.19 from yesterday’s opening price of $74.40/b, but prices since then have recovered the loss. Gasoline and diesel prices also opened slightly lower today, but they too are heading up.

Oil prices have strengthened today. Hurricane Michael has been upgraded to a Category 2 storm, and it is predicted to become a Category 3 storm tomorrow. The hurricane is approaching Florida, and at last count, 13 offshore oil platforms have been evacuated. Nearly one-fifth of U.S. Gulf of Mexico production is expected to be shut in. To the north, Irving Oil confirmed a “major incident” at its Saint John refinery. This is a sophisticated 320,000 bpd gasoline-maximizing (including catalytic cracking, catalytic reforming, hydrocracking, alkylation and isomerization) facility that exports significant quantities of fuel of the U.S. Northeast market.

However, Canadian resources are exerting downward pressure on prices. Canadian crude prices have dropped to record lows relative to U.S. crudes, offering low-cost feedstocks to U.S. refiners along delivery routes. Canada has increased production from oilsands projects by increasing efficiency at existing sites and by completing new projects, such as Suncor’s Fort Hills mine. In a situation analogous to that seen in the U.S., transport infrastructure is overloaded, and there are few routes available to export the new production. Moreover, some U.S. refineries are going into maintenance, cutting their demand for crude.