Fuels Market Watch 24

FUEL MARKETS TODAY – Market Overview

Crude oil futures prices are falling this morning, with a sell-off following yesterday’s surge. Prices yesterday were the highest of the year– above $58.50/b. WTI (West Texas Intermediate) crude forward prices opened at $58.51/b today, up slightly by $0.16 (0.27%) from yesterday’s opening price of $58.35/b. Gasoline futures prices also opened with gains today, while diesel prices continued to trail down. Futures prices are falling this morning, after yesterday’s run-up based on bullish inventory data and supply tightness.

Although prices currently are trending down, as of the time of this writing, crude and gasoline still appear to be heading for a finish in the black for the week. Diesel prices remain in the red. WTI crude forward prices are up by approximately $1.90/b (3.3%.) Gasoline forward prices are up by around 3.4 cents/gallon (1.9%.) Diesel forward prices are down by 3.9 cents/gallon (2.0%.)

Oil prices received considerable support from this week’s strong data in the U.S., combined with cuts in OPEC output. Yesterday, the International Energy Agency, (IEA,) reported that global oil output fell by 340,000 barrels per day in February, mainly from cuts in OPEC output. Some of the cuts were made voluntarily as part of the OPEC+ agreement, but a drop of 100,000 bpd was caused by Venezuela’s crisis. The IEA calculates that Saudi Arabia has cut its production by an astonishing 920,000 bpd since its production hit record highs in November. Venezuelan production is down 410,000 bpd year-on-year because of ongoing turmoil and mismanagement.

OPEC unity, however, may be showing cracks. Some countries have expressed concern over losing too much market share to U.S. shale producers, raising speculation that another oil price war may be possible.

The world has an uneasy feeling today. The international community was reeling in the aftermath of the Ethiopian Airlines crash outside Addis Ababa, which killed all 157 people on board. Then yesterday, New Zealand suffered a mass shooting at two mosques in Christchurch, where at least 49 people were killed and many more were wounded. It is a shock to have such an act of terrorism in New Zealand, the land of the Hobbits.