MARKET SNAPSHOT
Friday, June 14, 2019
By Dr. Nancy Yamaguchi
Oil prices were collapsing mid-week, with the downward spiral stopped only by two attacks on oil tankers in the Gulf of Oman on Thursday. The U.S. blames Iran for the attacks, but Tehran denies responsibility. WTI crude prices dropped by over $3/b between Monday and Wednesday, before news of the attacks began to send prices back up. WTI opened this morning $0.92/b (1.7%) below last Friday’s level. Crude prices have regained the territory above $52/b currently. Our weekly price review covers hourly forward prices from 9AM EST Friday June 7th through 9AM EST Friday June 14th. Three summary charts are followed by the Price Movers This Week briefing for a more thorough review.
GASOLINE PRICES
Gasoline opened on the NYMEX at $1.724/gallon on Friday June 7th, and prices opened at $1.7199/gallon on Friday June 14th, a decline of 0.41 cents (0.2%.) Gasoline forward prices have dropped by 34.76 cents/gallon over the past four weeks. Gasoline prices have been at their lowest levels since February, but prices are regaining some lost ground today. The market may end the week in the black. Gasoline trades are occurring mainly in the range of $1.71-$1.735/gallon. The latest price is $1.7269/gallon.
DIESEL PRICES
Diesel opened on the NYMEX at $1.8011/gallon on Friday June 7th and opened on Friday June 14th at $1.8092/gallon, an increase of 0.81 cents (0.4%.) Like crude and gasoline, diesel prices dropped significantly on Wednesday and bounced back on news of the attacks on tankers in the Gulf of Oman. The overall trend has been down, however. Diesel forward prices have crashed by 31.81 cents/gallon over the last four weeks. Diesel contracts currently are trading in the $1.80-$1.83/gallon range. The latest price is $1.8234/gallon.
WEST TEXAS INTERMEDIATE PRICES
PRICE MOVERS THIS WEEK : BRIEFING
Oil prices have fallen for four consecutive weeks. WTI crude prices fell to a low of $50.72/b on Wednesday when the inventory report was issued. Over the past four weeks, WTI prices have collapsed by $10.94/barrel.
U.S. oil supplies continued to rise, putting additional pressure on prices early in the week. Inventories rose once again. On Tuesday, the American Petroleum Institute (API) reported that crude oil inventories rose by 4.9 million barrels (mmbbls.) Gasoline inventories rose by 0.829 mmbbls. Diesel inventories were drawn down by 3.5 mmbbls.
Official statistics showed a smaller inventory build: The U.S. Energy Information Administration (EIA) reported additions of 2.206 mmbbls of crude oil and 0.764 mmbbls gasoline, partly offset by a 1.0-mmbbl draw from diesel inventories. The net addition was 1.97 mmbbls. While this is a modest addition to stockpiles, there has been a significant flow of oil into inventory this year. From April through the first week of June, crude inventories have climbed by approximately 29 mmbbls.
Markets have coped with a range of geopolitical risks this year, but Thursday’s attack on two tankers near the Strait of Hormuz was the most severe. The two tankers were the Norwegian-owned Front Altair and the Japanese-owned Kokuka Courageous. U.S. Secretary of State Mike Popeo blamed Iran for the attacks, based on a video that appears to show Iran’s Revolutionary Guard removing an unexploded limpet mine from the side of Kokuka Courageous. A limpet mine attaches to a ship’s hull with magnets. Tehran denied responsibility. The Iranian mission to the United Nations said in a statement on Thursday evening that Iran “categorically rejects the U.S. unfounded claim with regard to 13 June oil tanker incidents and condemns it in the strongest possible terms.” The increase in U.S.-Iran tension is strengthening oil prices, but having a mixed impact on other equities and commodities.
