Fuels Market Watch 24

Exclusive daily fuels market analysis by Dr. Nancy Yamaguchi.

FUEL MARKETS TODAY – Market Overview

Oil prices bounced back upon news of a “cease fire” in the U.S.-China trade war and a likely production cut from the OPEC-NOPEC coalition. WTI (West Texas Intermediate) crude forward prices opened at $52.45/b today, a recovery of $1.18 (2.3%) from Friday’s opening price of $51.27/b. Last week, WTI crude prices dropped to a new annual low of $49.41/b on Thursday, and prices dipped below the $50/b mark on Friday also. Another week in the red appeared likely. But WTI crude and gasoline managed to squeak through to finish in the black. Diesel prices finished in the red. On Friday, we noted that one of two things would be needed to break the downward trend: positive news from the G20 summit, or a firmer outlook for production cuts from the OPEC-NOPEC coalition. Both of these occurred, at least to some degree. Two additional price-strengthening developments also surfaced, in Libya and Canada. It has been an eventful few days.

WTI opened last week on Monday at $50.62/b, which was $4.04/b below the prior Friday’s opening price. This was the largest single-day drop of the year. Crude prices were volatile during the week, rising upon market opening on Tuesday and Wednesday, falling on Thursday, and rising on Friday. Friday’s prices managed to hang on to close the market at $50.93/b, ending $0.31/b in the black for the week. This broke a seven-week losing streak.

Gasoline prices opened last week at $1.3917/gallon on Monday, and prices dropped to $1.3905/gallon on Wednesday. These were the only two days all year that prices have opened below $1.40/gallon. Prices recovered to close at $1.4019/gallon on Friday, a weekly gain of 1.02 cents (0.7%.) Diesel, however, finished another week in the red. Diesel prices opened on Monday at $1.8776/gallon, falling by 4.82 (2.6%) cents to finish at $1.8294/gallon on Friday.

In Friday’s column, we believed that WTI crude prices still had a slim chance to finish in the black either if positive news emerged from the G20 meeting, or if there were firmer statements about an OPEC-Russia production cut agreement. Both occurred, and prices began to strengthen. Russia stated that it would join Saudi Arabia in cutting crude oil output. The U.S. and China declared a 90-day truce in the trade war.

Two additional price-strengthening developments also surfaced: First, bad weather in Libya has closed some oil exporting terminals. Although this is a temporary shut-in, it is happening at the same time that Canada’s Alberta Province announced mandatory oil production cuts to alleviate a pipeline bottleneck and a glut that has slashed Canadian crude values. These events will remove some supply from the market.

GASOLINE

Gasoline opened on the NYMEX at $1.4126/gallon today, a decline of 0.99 cents (0.69%) from Friday’s opening price of $1.4225 cents/gallon. Over the last 24-hour trading period from 9AM EST to 9AM EST, gasoline prices rebounded by 5.24 cents/gallon (3.71%.) Currently, gasoline prices are stabilizing in a new range of $1.44-$1.46/gallon. The latest price is $1.4494/gallon.

DIESEL

Diesel opened on the NYMEX at $1.8425/gallon today, a modest gain of 0.55 cents (0.28%) from Friday’s opening price of $1.8374/gallon. Over the last 24-hour period from 9AM EST to 9AM EST, diesel prices surged by 8.46 cents/gallon (4.68%.) Currently, diesel prices are stabilizing in a stronger zone of $1.88-$1.90/gallon. The latest price is $1.8914/gallon.

WEST TEXAS INTERMEDIATE

WTI (West Texas Intermediate) crude prices opened at $52.45/b today, a recovery of $1.18 (2.3%) from Friday’s opening price of $51.27/b. Last week, WTI crude prices dropped to a new annual low of $49.41/b on Thursday, and prices dipped below the $50/b mark on Friday as well. Over the last 24-hour period from 9AM EST to 9AM EST, crude futures jumped by $2.70/b (5.33%.) After the surge in buying, crude prices now appear to be stabilizing in the vicinity of $53/b. The latest price is $53.07/b.