Fuels Market Watch 24

FUEL MARKETS TODAY – Market Overview

Crude oil futures prices are flattening this morning, working to stay above the $57/b level. WTI (West Texas Intermediate) crude forward prices opened at $56.76/b today, up by $0.69 (1.23%) from yesterday’s opening price of $56.07/b. Diesel futures prices opened fractionally lower today, while gasoline futures prices opened with gains. Futures prices appear to be gently declining this morning, awaiting market direction. This will include upcoming data from the American Petroleum Institute and the Energy Information Administration.

The Bureau of Labor Statistics (BLS) just released the February Consumer Price Index (CPI.) The CPI for all urban consumers increased by 0.2% on a seasonally adjusted basis. It was the first increase in four months. The CPI rose 1.5% for all items for the 12 months ending February. The index for all items excluding food and energy rose 0.1% in February, 2.1% for the year. The energy index rose by 0.4% in February, after dropping 3.1% in January. Over the last 12 months, the energy index dropped by 5.0%.

Markets appear to accept the idea that global oil supply and demand will be moving into balance. While U.S. crude production grows, supplies are being tightened by political turmoil, including sanctions on Iran and Venezuela. Venezuela continues to be divided, with two competing presidents: incumbent Nicolas Maduro, and National Assembly leader and interim president Juan Guaido. Venezuela is now in day 4 of electricity blackouts, which Maduro blames on a cyberattack by the U.S. The power outages have further constrained Venezuelan crude export, already crippled by U.S. sanctions. There are reports that the power outage has backed up a line of tankers at the Jose oil terminal.

Supply continues to be moderated by the OPEC+ group. Saudi Arabia already has cut production deeper than promised, cutting around 0.5 million barrels per day (mmbpd) rather than the 0.322 mmbpd specified in the agreement. Saudi Energy Minister Khalid al-Falih announced that the Saudis would cut production again in March and reduce exports to key customers. Mr. al-Falih also said that OPEC and partners could extend the cut agreement beyond the initial six-month period.