Fuels Market Watch 24

FUEL MARKETS TODAY – Market Overview

Crude oil prices are easing this morning, after achieving hefty gains last week that brought crude prices back above the $55/b mark and hit highs exceeding $56/b. WTI (West Texas Intermediate) crude forward prices opened at $55.78/b today, up by $1.30 (2.39%) from Friday’s opening price of $54.48/b. Markets were closed on Monday in observance of President’s Day. Gasoline and diesel futures prices also opened with gains today, and current prices are easing. Prices are at three-month highs, re-attaining the levels last common in November 2018. Some profit-taking is expected today.

Crude oil and refined prices ended last week with significant gains. WTI crude prices opened on Monday, February 11th, at $52.66/b and closed Friday at $55.59/b, up by $3.12 (5.9%) for the week. Gasoline prices opened on Monday at $1.4416/gallon and closed on Friday at $1.5729, a leap of 15.21 cents (10.7%) for the week. Diesel prices opened on Monday at $1.910/gallon and closed on Friday at $2.0203/gallon, up significantly by 12.45 cents (6.6%) for the week.

Global oil supplies are now widely expected to grow tighter, after months of oversupply and pessimistic views about potentially shrinking demand. OPEC reported that crude production by its members dropped by 797 thousand barrels per day (kbpd) in January, led by Saudi Arabia, with a cut 350 kbpd. The International Energy Agency (IEA) believes that the cuts went even deeper. Despite geopolitical risk factors that could shift oversupply into shortage, (including U.S. sanctions against Iran and Venezuela,) Saudi Arabia pledged to cut its crude production by another 500 kbpd, stating that it would cut its total output to 9.8 million bpd in March.

On the demand side, global markets have been showing greater confidence in U.S.-China trade negotiations. In other global economies, some opinions suggest that the U.S.-China trade war is so important that even the U.S. and China are paying attention.