Fuels Market Watch 24

FUEL MARKETS TODAY – Market Overview

Crude oil futures prices are recovering today, throwing off the slump seen on Friday and Monday. WTI (West Texas Intermediate) crude forward prices opened today at $59.12/b today, up by $0.14 (1.49%) from yesterday’s opening price of $58.98/b. Gasoline and diesel futures prices also opened with gains today. Prices today are trending up, and WTI crude has re-attained the $60/b level.

Markets slid on Friday in response to far-reaching warning signs about the slowdown in global economic growth. Crude oil and gasoline prices managed to finish the week in the black nonetheless, though diesel prices ended the week down by a fraction of a cent. With global markets slowing, analysts are watching more intently for signs of slowdown in oil demand growth. Without clear signs of demand destruction, however, the supply-demand balance is getting tighter.

On the supply side, oil prices are receiving broad support from perceived tightness. The OPEC-NOPEC alliance is aggressively cutting production, led by Saudi Arabia. The Saudi government has not officially set any target prices per se, but recent reports place their goal at $70/b for Brent crude, which currently is priced at around $67.50/b. On Friday, Baker Hughes reported that the U.S. active oil rig count fell by 9, and the natural gas rig count fell by one. It was the fifth week in a row that the oil rig count has fallen. This supports oil prices, since it could signal that recent forecasts of U.S. oil production have been overly optimistic. Supplies continue to be constrained from sanctions on Venezuela and Iran. In the near term, renewed production from Libya may soften the market moderately.

Today, markets will watch for the U.S. oil inventory report from the American Petroleum Institute. This will be followed by official statistics from the Energy Information Administration.