Fuels Market Watch 24

FUEL MARKETS TODAY – Market Overview

Crude oil prices opened strongly again this morning, topping the $72/b level. WTI (West Texas Intermediate) crude prices in today’s trading session opened at $72.25/b, up by $1.11 from yesterday’s opening. In just the past two days, WTI prices have risen by over $2/b. Gasoline and diesel prices also opened today with strong gains. The market currently appears to be holding to all gains, and maintaining some upward momentum.

Supply concerns are moving markets up. As noted in this daily column, the meeting on Sunday between OPEC and non-OPEC oil producing countries was not a formal one, and we did not expect any change in policy. Yet the market appears to have expected the producers’ group to commit to at least a small boost in output. This was not done, and statements from the energy ministers indicated there would be no need for additional supplies. U.S. President Trump has pressured OPEC to bring prices down, but the group has been in no rush to take action they fear might re-flood the market.

U.S. crude production levelled off over the summer, partly because of infrastructure constraints. The U.S. Energy Information Administration (EIA) reported that domestic crude production rose from 10,900 bpd during the week ended September 9th to 11,000 bpd during the week ended September 14th. U.S. production has been bouncing back and forth in this range since the second week of June. In contrast, there was significant production growth in the January-May period. Baker Hughes released its weekly rig count on Friday. During the week ended September 21st, the active oil rig count fell by one, from 867 to 866, and the natural gas rig count remained the same at 186.