Fueling Strategy: Please keep tanks topped today/tonight – Wednesday AM wholesale prices will go UP 2 cents – Be Safe Today!!
NYMEX Crude $ 48.66 DN $.1900
NY Harbor ULSD $1.5164 UP $.0068
NYMEX Gasoline $1.6043 UP $0.0089
NEWS
Oil finished slightly lower Tuesday, as a report from the International Energy Agency warned that an extension to the OPEC-led production cut agreement won’t be enough to rebalance the global crude market.
That offset support from expectations that the Organization of the Petroleum Exporting Countries and its allies will extend production cuts into 2018.
June West Texas Intermediate crude slid 19 cents, or 0.4%, to settle at $48.66 a barrel on the New York Mercantile Exchange. July Brent crude on London’s ICE Futures exchange dipped 17 cents, or 0.3%, to $51.65 a barrel. On Tuesday, the IEA said in a report that extending the oil output cuts may not help trim global stockpiles to the required five-year average.
The agency’s report helped to undercut some of the enthusiasm following energy ministers from OPEC member Saudi Arabia and Russia, who said in a joint statement over the weekend that they support a nine-month extension of efforts to curb crude output, through the first quarter of 2018. The OPEC-led agreement to cut production by 1.8 million barrels a day ends in June and included Russia, which isn’t an OPEC member but the world’s largest crude producer. The news sent prices up by roughly 2% Monday. “It appears that the IEA report failed to inspire more buying because of the conflicting messages,” said Phil Flynn, senior market analyst at the PRICE Futures Group. Flynn said reports talk that OPEC still has more work to do to draw down global inventories has damped enthusiasm.
A formal decision by OPEC and its allies is expected to be announced on May 25 in Vienna. “It seems everybody expects a big extension to occur—a slight positive for oil prices,” Richard Hastings, macro strategist at Seaport Global Securities, told Market Watch. But “we have to wonder what the price would be without the weekend conversation between Saudi and Russian oil ministers.” Hastings said “the global oil industry can collaborate on more cuts to drive prices a bit higher, but what will demand growth be at $60 per barrel, when demand growth is already not exactly robust?”
The common view among analysts is that OPEC has little choice but to cut more production to bring global inventories down and lift prices. In 2016, when U.S. oil prices averaged around $45 a barrel, the cartel’s revenue fell 15% to $433 billion, the lowest level since 2004, according to the U.S. Energy Information Administration. Nearly five months into the cuts, OPEC data shows the cartel’s most recent production has fallen, but crude stockpiles in most industrialized nations are almost 300 million barrels above the five-year average. OPEC also recently boosted its forecast for this year’s oil-production growth from countries outside the cartel by more than 60%.
The proposed extension to production cuts comes amid signs that U.S. crude inventory is easing back. It’s fallen for five weeks in a row, based on EIA data. A weekly update on petroleum supplies is due out from the American Petroleum Institute late Tuesday. The EIA will release its data early Wednesday, with analysts polled by S&P Global Platts forecasting a decline of 2.2 million barrels in crude stockpiles.
Have a great day,
Loren R. Bailey, President
FUEL MANAGER SERVICES INC
“Serving the Trucking Industry Since 1992”