Analysis by Dr. Nancy Yamaguchi


West Texas Intermediate (WTI) crude oil prices remained buoyant on Friday and over the weekend, with highs breaking through the $50 per barrel (/b) level for the first time since May 30. Prices have opened higher for the past five trading sessions. This morning, prices are trailing off their previous highs, but they are maintaining strength in the vicinity of $49.50/b.


The market finished solidly in the black last week. WTI crude closed at $49.71/b, up by a hefty $4.09, or 9%, since Monday’s opening. This was by far the largest weekly gain of the year. Diesel closed at $1.6397/gallon on Friday, up by 12.5 cents, equal to an 8.3% gain for the week. Gasoline closed Friday at $1.6761/gallon, up by 11.86 cents, or 7.6%, for the week.


Baker Hughes released its rig count data on Friday, showing an addition of two oil rigs and six natural gas rigs. This brought the active rig count up to 958, the highest count since the week of April 10, 2015.


The increase in the rig count did not halt the price rally. It appears that the prospect of continued strength in U.S. output is being overridden by the news of declining inventories and reduced exports from key OPEC countries. Saudi Arabia announced that it would reduce its crude exports in August to counteract a weakening in compliance from some of its fellow producers.


The United Arab Emirates (UAE) and Kuwait announced that they would join Saudi Arabia. UAE Oil Minister Suhail Al Mazrouei pledged to reduce exports of Das, Murban and Upper Zakum crudes by 10% in September. Shortly after, the Kuwait Petroleum Corporation (KPC) agreed to cut its production further and reduce exports to key U.S. customers.


WTI crude opened at $49.85/b this morning, up 68 cents from Friday’s opening value. Prices are $49.46/b currently, down by 39 cents from today’s opening.


Diesel opened this morning at $1.650/gallon, up significantly by 4.51 cents, or 2.81%, from Friday’s opening. This was the highest opening price for diesel since April 12. Diesel prices are $1.6442/gallon currently, down by 0.58 cents from today’s opening price.


Gasoline opened today at $1.7017/gallon, a large increase of 5.79 cents, or 3.52%, from Friday’s opening. This was the highest opening price for gasoline since April 18. Gasoline prices are $1.6885/gallon currently, down by 1.32 cents from today’s opening.