Fueling Strategy: Please fill as needed tonight – Be Safe!

NYMEX Crude $ 36.14 UP $.3300
NY Harbor ULSD $1.0876 DN $.0128
NYMEX Gasoline $1.1749 DN $.0345

NEWS
The U.S. oil benchmark ended higher Tuesday, trading at a premium to its global counterpart for the first time since January, boosted in part by the lifting of a four-decade ban on U.S. oil exports and apparent unwinding of bearish bets before year-end, analysts said.

Futures on Brent crude the global benchmark, fell 24 cents, or 0.7%, to finish at $36.11 a barrel on London’s ICE exchange, while futures for February delivery of West Texas Intermediate crude the U.S. benchmark, rose 33 cents, or 0.9%%, to finish at $36.14 a barrel. The lifting of the oil export ban is part of the equation, along with the unwinding of a long Brent/short WTI spread before the end of the year and an uptick in North Sea production of Brent crude, said Phil Flynn, senior market analyst at Price Futures Group in Chicago. Longer term, WTI is basically working to “reassert itself” given the lifting of the export ban, Flynn said in a phone interview. “In the short term it’s probably more about increased North Sea production being a bit higher and that U.S. demand will be a little bit stronger,” he said. U.S. demand is expected to strengthen heading into the Christmas holiday and amid the prospect of colder weather in coming weeks.

Analysts at JBC Energy note that, with the exception of a small uptick in 2007, U.K. offshore output is set to increase year-over-year for the first time since 1999. The firm expects U.K. production to be up by around 100,000 barrels a day, or 12%. Norwegian output in the North Sea has also been strong. But concerns about substantial oil oversupply amid a slower-than-expected drop in shale production in the U.S., unrestrained output by members of the Organization of the Petroleum Exporting Countries, and the prospect of renewed exports by Iran are expected to keep a lid on any oil rebound. “We estimate that the global oil market is oversupplied by close to 1 million barrels a day. Balancing the global oil market requires that surplus be eliminated. The only reliable mechanism to accomplish this is the price of oil,” wrote Phillip Jungwirth, analyst at BMO Capital Markets, in a note downgrading oil-and-gas exploration firm Energen Corp. to market perform from outperform. BMO’s base case is for Brent crude to remain in the $35-to-$40-a-barrel range long enough to convince U.S. producers to cut the rig count by another 25% to 30% “and hold it at that level for several quarters,” Jungwirth said.

Refineries in China, meanwhile, have been a key driver of global crude oil demand topping 1.8 million barrels a day in 2015 and this is reflected in rising exports of refined products, or distillates, to other countries in Asia. According to Chinese Customs data, net distillate exports were 0.54 million barrels a day in November. About 93,000 barrels a day of that was fuel oil, only the third time on record that the product has been exported. Chinese independent refineries, known as teapots, are driving growth due to the increase of licenses allowing them to both import crude oil and export distillates. Many are now running at 80% utilization rather than the usual 30%-40%, according to London-based research consultancy Energy Aspects.