Exclusive Analysis by Dr. Nancy Yamaguchi

WTI crude oil prices have traded in a narrow range this week, typically within a bandwidth of $40 to $41 a barrel. Economic re-opening has stimulated demand, yet it also has caused a serious upswing in COVID-19 infections, forcing many states to backtrack and re-close various businesses and activities. More than 77,000 new cases were recorded on Thursday, the highest-ever jump in daily cases. Nonetheless, traders have been determined to focus on the positive side of the equation, riveted by each bit of progress made in COVID-19 vaccines and treatments. Market experts today predict recovery in stock markets, which should support oil prices. West Texas Intermediate (WTI) crude prices have been rangebound in the $40-$41 a barrel range, but prices today are at the low end of the range, and oil prices will require some good news today to hold on to the $40 a barrel level. The week may hold on for a finish in the black for crude prices, but gasoline and diesel prices are heading down.

The Department of Labor reported that another 1.30 million people filed initial unemployment claims during the week ended July 11, down from 1.31 million the prior week. Although the numbers are trailing down, they did not taper down to the 1.25 million predicted by economists. During the 17 weeks since U.S. states began to issue shelter-in-place orders, 53.7 million Americans have filed initial jobless claims. The banking sector is bracing for a host of bad debts, and some banks are preparing for layoffs. Six U.S. banks cut $35 billion from their profits.

As of the time of this writing, the Johns Hopkins Coronavirus Resource Center reports that global cases of COVID-19 are approaching the 14 million mark, and deaths have surpassed the half-a-million mark. Global cases have risen to 13,837,395, with 590,702 deaths. Confirmed cases in the U.S. have risen to 3,576,593. U.S. deaths attributed to the disease have reached 138,362. Thursday brought a new record-high of 77,255 new COVID-19 cases in the U.S.

WTI crude futures prices opened at $40.72 a barrel today, up by $1.14 a barrel (2.9%) from last Friday’s open of $39.58 a barrel. Prices started today on a downward slope, but most stock market indicators are beginning to point up, which should support oil prices. WTI prices have not been able to regain the $41 a barrel level, but prices so far today have managed to remain above $40 a barrel. Oil prices appear to be heading for a finish in the black. Our weekly price review covers hourly forward prices from Friday, July 10 through Friday, July 17. Three summary charts are followed by the Price Movers This Week briefing, which provides a more thorough review.

Gasoline Prices

Gasoline futures prices opened at $1.2339 per gallon today on the NYMEX, compared with $1.2484/gallon on Friday, July 10. This was a drop of 1.45 cents (1.2%.) March brought a crippling collapse of nearly 87 cents per gallon, but prices gradually crept back up in April and May. U.S. average retail prices for gasoline rose by 1.8 cents/gallon during the week ended July 13. Five weeks ago, retail prices reclaimed the territory above $2 per gallon. Retail prices averaged $2.195/gallon at the national level. Gasoline futures prices are weak today, trading in the range of $1.20/gallon to $1.24/gallon. So far in early trading, gasoline has not maintained price levels as well as crude prices have. The week appears to be heading for a finish in the red. The latest price is $1.2044/gallon.

Source: Prices as reported by DTN Instant Market 

Diesel Prices

Diesel opened on the NYMEX today at $1.2286/gallon, a gain of 0.47 cents, or 0.4%, from last Friday’s open of $1.2239/gallon. U.S. average retail prices for diesel edged up fractionally by 0.1 cent per gallon during the week ended July 13 to average $2.438/gallon. Diesel prices have weakened this year, missing some of the price recovery seen in crude and gasoline markets. Diesel futures prices today are trending down, and the week may finish in the red. Currently, diesel is trading in the range of $1.21-$1.231/gallon. The latest price is $1.2190/gallon.

Source: Prices as reported by DTN Instant Market

WTI Crude Prices

WTI crude forward prices opened on the NYMEX today at $40.72 a barrel, compared with $39.58 a barrel last Friday. This was a gain of $1.14 a barrel (2.9%.) Prices stayed above the $40 a barrel level most of this week, but markets are feeling pressure today. The increase of COVID-19 infections and fatalities caused a pullback. Prices are heading down currently, but they are still holding above $40 a barrel. Crude prices may achieve a finish in the black. WTI prices are trading in the $40.00–$40.75 a barrel range currently. The latest price is $40.18 a barrel.

Source: Prices as reported by DTN Instant Market

PRICE MOVERS THIS WEEK: BRIEFING

WTI crude oil prices have been trading in a narrow range this week, typically within a bandwidth of $40 to $41 a barrel. Economic re-opening has stimulated demand, yet it also has caused a serious upswing in COVID-19 infections, forcing many states to backtrack and re-close various businesses and activities. More than 77,000 new cases were recorded on Thursday, the highest-ever jump in daily cases. Nonetheless, traders appear determined to focus on the positive side of the equation, riveted by each bit of progress made in COVID-19 vaccines and treatments. Market experts today predict a bit of recovery in stock markets, which should support oil prices. West Texas Intermediate (WTI) crude prices have been rangebound in the $40-$41 a barrel range, but maintaining this range will be reasonably strong performance. Crude prices may achieve a finish in the black this week, though gasoline and diesel prices are weakening.

The Department of Labor reported that another 1.30 million people filed initial unemployment claims during the week ended July 11, down from 1.31 million the prior week. Although the numbers are trailing down, they did not decline to the 1.25 million predicted by economists. During the 17 weeks since U.S. states began to issue shelter-in-place orders, 53.7 million Americans have filed initial jobless claims. The continuing surge of COVID-19 cases is prompting some states to roll back their re-opening processes, which will cut into employment. Another round of federal stimulus has been factored into market expectations, but at some point, stimulus spending must end. The banking sector is bracing for a host of bad debts, and some banks are preparing for layoffs. Six U.S. banks cut $35 billion from their profits. Wells Fargo announced that it would need to cut tens of thousands of jobs in order to dramatically reduce costs.

As of the time of this writing, the Johns Hopkins Coronavirus Resource Center reports that global cases of COVID-19 are approaching the 14 million mark, and deaths have surpassed the half-a-million mark. Global cases have risen to 13,837,395, with 590,702 deaths. Confirmed cases in the U.S. have risen to 3,576,593. U.S. deaths attributed to the disease have reached 138,362. Thursday brought a new record-high of 77,255 new COVID-19 cases in the U.S. Dr. Anthony Fauci has warned that new daily cases could top 100,000 if people fail to observe preventive measure such as social distancing and mask wearing. Dr. Fauci is director of the National Institute of Allergy and Infectious Diseases (NIAID) and a lead member of the White House Coronavirus Task Force.

Oil prices were flagging on Tuesday until they received a boost from American Petroleum Institute (API) information showing a significant drawdown of 8 mmbbls from crude oil stockpiles, plus a drawdown of 3.6 mmbbls from gasoline stockpiles. Diesel inventories were reported to have grown by 3 mmbbls. The API’s net inventory draw was a sizeable 8.9 mmbbls. Market analysts had predicted a similar pattern of drawdowns from crude and gasoline inventories plus the addition to diesel inventories, but with more modest volumes all around.

Oil prices strengthened further on Wednesday when official inventory data were released by the U.S. Energy Information Administration (EIA.) The EIA statistics showed across-the-board inventory drawdowns: 7.493 mmbbls from crude stockpiles, 3.147mmbbls from gasoline inventories, and 0.453 mmbbls from diesel inventories. The EIA net result was an inventory drain of 11.093 mmbbls. Crude oil inventories have expanded in 20 of the 27 weeks since the first week of January, sending a total of 104.73 mmbbls of crude oil into storage.

During the worst of the oversupply, the EIA reported that crude oil in storage at Cushing rose from 35,501 barrels during the week ended January 3, 2020, to 65,446 barrels during the week ended May 1, 2020, an increase of 29,124 barrels. Cushing stocks fell to 45,582 mmbbls during the week ended June 26, but the downward trend was reversed during the past two weeks, and Cushing stocks are back up to 48,737 mmbbls. Some surplus crude is being stored in the National Strategic Petroleum Reserve (SPR). The EIA reports that SPR additions have been made weekly since the week ended April 24, with total additions now at 21,182 mmbbls. Current SPR stocks are 656.149 mmbbls.

U.S. crude production has been flat. The EIA reported that U.S. crude production during the week ended July 10 averaged 11 mmbpd, unchanged from the three prior weeks. According to the EIA’s weekly data series, U.S. crude production averaged 13.025 mmbpd in February, the highest total ever. Production fell to 12.25 mmbpd in April, 11.52 mmbpd in May, 10.9 mmbpd in June, and 11.0 mmbpd during the first two weeks of July.