Fuels Market Watch 24

FUEL MARKETS TODAY – Market Overview

Crude oil futures prices rose modestly today at market opening, recapturing Wednesday’s small loss, then handing it back. WTI (West Texas Intermediate) crude forward prices opened at $64.48/b today, up by $0.26 (0.40%) from yesterday’s opening price of $64.22/b. Gasoline and diesel futures prices opened with more significant gains today. Gasoline futures prices have been particularly strong, opening again above $2/gallon. Yesterday was the first time in five months this had happened. However, markets appear to be refocusing on threats to global demand, and prices currently are declining. WTI crude prices have been dipping below the $64/b level.

The upward trend of crude oil prices levelled off yesterday when official statistics for the week showed a significant increase in crude oil inventories. In contrast, gasoline and diesel prices continued to rise upon news of inventory reductions. The Energy Information Administration (EIA) reported yesterday that U.S. crude oil stockpiles grew by 7.03 million barrels (mmbbls) during the week ended April 5^th. This was the third consecutive week that oil inventories rose. Countering this, however, gasoline inventories were drawn down by a whopping 7.710 mmbbls, and diesel inventories were drawn down by 0.116 mmbbls. The net was a decrease of 0.797 mmbbls of oil in storage. Earlier, the American Petroleum Institute (API) reported a 4.1-mmbbl increase in crude oil inventories, more than countered by drawdowns of 7.1 mmbbls from gasoline inventories and 2.4 mmbbls from diesel inventories. Although the EIA data was less bullish than the API data, fuel prices retained much of their strength.

This morning, the International Energy Agency (IEA) refocused attention on the demand side of the global oil equation. Oil prices have been rising strongly, based on supply tightening. The IEA noted “an extraordinarily wide divergence of view as to how strong growth will be.” The IEA is maintaining its forecast of 1.4 million barrels per day demand growth (around 1.4%) in 2019, but it cautioned that it would accept the fact that there were “mixed signals about the health of the global economy.” This appears to be having a cooling effect on prices today.