Fuels Market Watch 24

Exclusive daily fuels market analysis by Dr. Nancy Yamaguchi.

FUEL MARKETS TODAY – Market Overview

Crude oil futures prices opened modestly lower today, following news of additions to supply, but they recovered some of the loss and are trading up and down this morning. WTI (West Texas Intermediate) crude forward prices opened at $56.20/b today, down by $0.08 (0.14%) from yesterday’s opening price of $56.28/b. Diesel futures prices opened slightly lower also today. Gasoline futures prices opened with gains. Prices moved back up in early morning trades, but they quickly hit a ceiling and lost upward momentum. Prices may come under additional downward pressure if U.S. equities weaken today. The Dow Jones Industrial Average just opened lower for the fourth consecutive day. So far in March, the Dow Jones has fallen by over 405 points.

Yesterday, crude prices appeared neutral while product prices received a modest boost from the release of weekly oil supply data by the Energy Information Administration (EIA.). The EIA reported a large addition of 7.069 million barrels (mmbbls) to crude inventories. This closely matched the 7.29 mmbbls that had been reported earlier by the American Petroleum Institute (API.) Countering the crude stock addition, the EIA also reported a large drawdown of 4.227 mmbbls from gasoline inventories plus a draw of 2.393 mmbbls from diesel inventories. The net was an addition of 0.449 mmbbls to inventories. The EIA data was more bullish than the API had expected. The API reported a drawdown of 0.391 mmbbls from gasoline inventories plus a draw of 3.1 mmbbls from diesel inventories, for a net addition of 3.799 mmbbls.

OPEC and partners continue to achieve high rates of compliance with their production cut agreement. OPEC data for January showed a production level of 30.806 mmbpd, down by 1.549 mmbpd from October levels. This week, analysts estimated that February output fell by another 0.550 mmbpd. If this estimate is accurate, OPEC will have reduced output by 2.1 mmbpd in just four months. These aggressive cuts are placing a floor under oil prices. The ceiling this week has come from concern over the global economy, plus supply-side news of growth in output. In Libya, force majeure was lifted from the Sharara oilfield, a 315,000-bpd installation. In the U.S., ExxonMobil and Chevron plan to approximately triple their production in the Permian Basin. 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.

GASOLINE

Gasoline opened on the NYMEX at $1.7845/gallon today, up by 2.41 cents (1.34%) from yesterday’s opening price of $1.7604 cents/gallon. Over the past 24 hours from 9AM EST to 9AM EST, gasoline prices rose by 4.26 cents (2.41%.) Gasoline prices are holding strength relative to crude and diesel mainly because of the seasonal shift to lower RVP grades, plus a few refinery issues. Gasoline forward prices currently are working to hold some of the recently achieved gains, trading between $1.78-$1.81/gallon. The latest price is $1.7974/gallon.

DIESEL

Diesel opened on the NYMEX at $2.0124/gallon today, down by 0.22 cents (0.11%) from yesterday’s opening price of $2.0146/gallon. Over the past 24 hours from 9AM EST to 9AM EST, diesel prices rose by 1.61 cents (0.80%.) Diesel prices have fallen off recent highs and currently are stabilizing in the range of $2.00-$2.02/gallon. The latest price is $2.0093/gallon.

WEST TEXAS INTERMEDIATE

WTI (West Texas Intermediate) crude forward prices opened at $56.20/b today, down by $0.08 (0.14%) from yesterday’s opening price of $56.28/b. Over the past 24 hours from 9AM EST to 9AM EST, WTI crude prices recovered by $0.76 (1.36%.) Currently, crude prices are moving up and down in the range of $56.25/b-$56.75/b. The latest price is $56.43/b.