Fuels Market Watch 24

Exclusive daily fuels market analysis by Dr. Nancy Yamaguchi.

FUEL MARKETS TODAY – Market Overview

Crude oil futures prices are ebbing today, falling back after being unable to authoritatively pass the $60/b level. WTI (West Texas Intermediate) crude forward prices opened today at $59.87/b today, down by $0.12 (0.20%) from yesterday’s opening price of $59.99/b. WTI forward prices have not opened a session above $60/b since November 12th. Gasoline futures prices opened with gains today, whereas diesel forward prices were slightly down. Prices are showing storm-related volatility, as catastrophic flooding in the Midwest is putting millions of people at risk.

In the Midwest, record-breaking winter snowstorms followed by torrential rains are causing what the National Oceanic and Atmospheric Administration (NOAA) calls a “potentially unprecedented flood season.” NOAA warns that over 200 million people are at risk in 25 states. Many areas already have been hit by snow and rain 200% above norms. Last week, thousands were forced to evacuate their homes because of a “bomb cyclone,” defined as such because the pressure inside the storm cell dropped so quickly that it gave the storm truly explosive strength. Such a massive disaster causes regional price volatility. Supply disruptions can drive up local prices. For example, over 10% of U.S. ethanol production is said to be shut in, supporting gasoline prices relative to diesel prices. However, the disruptions in the daily lives of millions of people can change patterns of fuel demand.

Oil prices lost their upward momentum this morning, but crude oil and gasoline prices may be heading for another finish in the black. As of the time of this writing, WTI crude futures prices are up by $0.81/b for the week (1.4%.) Gasoline prices are up strongly by 6.45 cents/gallon (3.4%.) Diesel prices are down by 0.86 cents/gallon (0.4%.)

The middle of the week brought a significant price rally, set off by the release of weekly statistics from the Energy Information Administration (EIA.) The EIA reported across-the-board drawdowns from crude oil, gasoline and diesel inventories, respectively: 9.589 million barrels (mmbbls,) 4.587 mmbbls, and 4.127 mmbbls. The total was an 18.303-mmbbl reduction in oil inventories. The inventory reductions were the largest of the year.

The price rally lost steam as markets digested results of the latest meeting of the Federal Open Market Committee (FOMC.) Federal Reserve Chair Jerome Powell announced that the new Fed plan included no interest rate increases in 2019, one in 2020, and none in 2021. While markets were gratified that interest rates would not rise, the reason behind the Fed’s reassessment was a slowdown of the economy.

GASOLINE

Gasoline opened on the NYMEX at $1.9275/gallon today, up by 2.08 cents (1.08%) from yesterday’s opening price of $1.9067 cents/gallon. Over the past 24 hours from 9AM EST to 9AM EST, gasoline prices rose by 0.73 cents (0.38%.) Gasoline forward prices currently are volatile, trading between $1.90-$1.93/gallon. The latest price is $1.9122/gallon.

DIESEL

Diesel opened on the NYMEX at $1.9847/gallon today, down by 1.74 cents (0.86%) from yesterday’s opening price of $2.0021/gallon. Before yesterday, diesel forward prices had not opened above $2/gallon in nearly two weeks. Over the past 24 hours from 9AM EST to 9AM EST, diesel prices fell by 3.61 cents (1.81%.) Diesel prices are falling currently, trading in the $1.95-$1.97/gallon range. The latest price is $1.9571/gallon.

WEST TEXAS INTERMEDIATE

WTI (West Texas Intermediate) crude forward prices opened at $59.87/b today, down by $0.12 (0.2%) from yesterday’s opening price of $59.99/b. Over the past 24 hours from 9AM EST to 9AM EST, WTI crude prices fell by $0.71 (1.18%.) Currently, crude prices are trending down, trading in the range of $59.00/b-$59.50/b. The latest price is $59.20/b.