Fuels Market Watch 24

FUEL MARKETS TODAY – Market Overview

Crude oil futures prices are easing this morning, retreating below the $59/b level. WTI (West Texas Intermediate) crude forward prices opened today at $59.02/b today, up by one penny (0.02%) from yesterday’s opening price of $59.01/b. Gasoline and diesel futures prices also opened with gains today. However, prices have lost their upward momentum as many traders await today’s results of the Fed meeting and the release of weekly statistics from the Energy Information Administration (EIA.)

The American Petroleum Institute (API) reported across-the-board drawdowns of oil inventories for the week ended March 15^th. This encouraged yesterday’s price surge. According to the API, crude stocks were drawn down by 2.133 million barrels (mmbbls,) gasoline stocks were drawn down by 2.794 mmbbls, and diesel stocks were drawn down by 1.607 mmbbls. The EIA will release official statistics later today. A survey of experts predicts that the EIA data will show a build of 1 mmbbls of crude for the week, and drawdowns of 2.1 mmbbls each of gasoline and diesel.

Alberta Province is now relaxing its mandatory cuts in oil production. The cuts were made to ease constraints on storage and transport infrastructure, and to prop up Canadian crude prices, which had fallen steadily relative to U.S. crudes. The price differentials between U.S. WTI crude and Western Canadian Select (WCS) had grown as wide at $50/b, but the differential has narrowed, and currently WCS prices are approximately $10 below WTI prices. Alberta’s government announced that the limits on production would be raised by 25,000 bpd in May and another 25,000 bpd in June, noting also that less diluent would be needed as the weather grew warmer. Increasing the flow of Canadian crudes is moderating prices in the U.S.