Fuels Market Watch 24

FUEL MARKETS TODAY – Market Overview

Crude oil futures prices eased today, following news of additions to supply. WTI (West Texas Intermediate) crude forward prices opened at $56.28/b today, down by $0.17 (0.3%) from yesterday’s opening price of $56.45/b. Gasoline and diesel futures prices opened modestly higher. Product prices are holding value, while crude prices are under pressure.

Crude prices weakened upon the release of oil inventory data by the American Petroleum Institute (API.) The API reported that U.S. crude oil inventories rose by 7.29 million barrels (mmbbls) during the week ended March 1st. Gasoline inventories were reported to have fallen by 0.391 mmbbls, and diesel inventories were drawn down by 3.1 mmbbls. The net was an addition of 3.799 mmbbls to oil in inventory. A survey of market experts had predicted a much smaller addition of 1.33 mmbbls to crude inventories, which was more than offset by drawdowns of 1.8 mmbbls from gasoline stocks and 1.4 mmbbls from diesel stocks. The Energy Information Administration (EIA) will release official statistics later today.

Crude prices also were pressured by an announcement yesterday that ExxonMobil and Chevron plan to expand their production in the Permian Basin, approximately tripling their output and dominating the region. ExxonMobil plans to raise its Permian Basin crude production to 1.0 mmbpd by the year 2024. Chevron forecasts that its production will rise to 0.6 mmbpd by the end of 2020 and reach 0.9 mmbpd by 2023. Currently, ExxonMobil’s production in the basin is under 0.3 mmbpd, and Chevron’s is approximately 0.35 mmbpd.

Internationally, crude supplies also are expected to grow as production resumes from Libya’s Sharara oilfield. The National Oil Company (NOC) lifted force majeure on Monday, and it plans to restore production of 315,000 bpd, possibly as soon as today. The facility had been captured by a militant faction in December. Eastern-based military forces known as the Libyan National Army (LNA) took control over the facility last month, but the NOC demurred from restoring production until all armed forces left the area. The NOC reported that it also needs to repair the damage caused by looting and vandalism, which had cut production capability by 20,000 bpd.