Fuels Market Watch 24

FUEL MARKETS TODAY – Market Overview

Crude oil prices received a boost yesterday, and they surged past $71/b. WTI (West Texas Intermediate) crude prices in today’s trading session opened at $71.39/b, a significant gain of $1.68 from yesterday’s opening. Gasoline and diesel prices also opened with sizeable gains today. The strong upward trend was corrected downward this morning. Currently, prices are stabilizing, and the market is holding to some of its gains.

The U.S. Energy Information Administration (EIA) published official data on oil inventories yesterday, reporting a sizeable drawdown of 2.057 million barrels from crude oil stocks. The EIA also reported a drawdown of 1.719 mmbbls from gasoline stocks, and a smaller stock buildup of 0.839 mmbbls of diesel. The net was an oil stock drawdown of 2.937 mmbbls.

The official data caused prices to rise, particularly since earlier, the American Petroleum Institute (API) had reported a crude stock build of 1.25 million barrels, a gasoline drawdown of 1.49 mmbbls of gasoline, and a diesel stock build of 1.54 mmbbls, yielding a net build of 1.3 mmbbls. The official data from EIA was viewed as significantly more bullish.

Prices also are receiving support from news that the OPEC and non-OPEC oil producers now participating in the oil production cuts may not officially agree upon a production increase at their upcoming meeting in Algeria this weekend. The group will discuss the loss of Iranian supplies. OPEC has been under pressure from U.S. President Trump, who tweeted yesterday “The OPEC monopoly must get prices down now!” Yet Saudi Arabia has not shown urgency to cut prices. (OPEC is not a monopoly, and it has no monopoly powers, but its actions can move market prices.)