Fuels Market Watch 24

FUEL MARKETS TODAY – Market Overview

Crude oil futures prices hit bottom after yesterday’s collapse, at least temporarily, and prices are creeping back up. WTI (West Texas Intermediate) crude prices in today’s trading session opened at $56.02/b, a recovery of $0.75 (1.36%) from yesterday’s opening price of $55.27/b. This broke a 12-day losing streak. Yesterday brought the largest single daily drop at market opening all year. It also was the lowest opening price in nearly three years. Gasoline and diesel futures prices also bounced back in today’s trading session, and prices are stable currently.

Today’s trading session is bringing a respite from a long series of losses which culminated in a sharp collapse yesterday. As of yesterday, WTI forward prices had crashed by $20.91/b (27.4%) from the peak opening price of $76.18/b on October 4th. It remains to be seen if $55/b remains a psychological floor for WTI prices.

The underlying supply-demand issues remain. U.S. sanctions on Iran brought the threat of a looming shortage. But this has been largely brushed aside because of weak demand, production increases in other countries, and the granting of temporary exemptions to eight countries who are Iran’s key customers. In the near-term, the market is oversupplied, and oil is flowing back into storage. The American Petroleum Institute (API) reported that U.S. crude oil inventories appear to have increased by a massive 8.79 million barrels (mmbbls) during the week ended November 9th. Gasoline inventories rose by 0.188 mmbbls, while diesel inventories were drawn down by 3.224 mmbbls. The API data showed a significantly larger addition to stockpiles than had been predicted by industry analysts. The U.S. Energy Information Administration (EIA) will release official statistics later today.