Fueling Strategy: Please fill as needed tonight and Tuesday AM – Be Safe Tonight!

NYMEX Crude $ 31.41 DN $1.7500
NY Harbor ULSD $1.0149 DN $0.0372
NYMEX Gasoline $1.1130 DN $0.0147

NEWS
U.S. oil futures settled under $32 a barrel on Monday for the first time since December 2003, with concerns over risks for a slowdown in Chinese energy demand and expectations that Iran will soon add to the world’s glut of crude supplies helping to send prices lower for a sixth straight session.

February West Texas Intermediate crude shed $1.75, or 5.3%, to settle at $31.41 a barrel on the New York Mercantile Exchange, following a drop of more than 10% last week. That was the lowest settlement since Dec. 5, 2003, according to Fact Set data, tracking the most-active contracts. The drop below $32 for WTI “is significant as that is a key technical support level,” said Tim Evans, chief market strategist at Long Leaf Trading Group. “Traders will be following any news out of China relating to a change in investment sentiment,” he said. The market also “needs to see U.S. [economic] numbers post positives this week as the market needs strength somewhere to offset Asian weakness.” February Brent crude, the global crude benchmark lost $2, or 6%, to end at $31.55 a barrel on London’s ICE Futures exchange. Prices settled at their lowest level since April 6, 2004, according to Fact Set. Concerns over China’s economy continue to weigh heavily on sentiment. “Overall, the mixed Chinese economy and easing monetary policies [outside of the U.S.] are a big part of oil’s weakness, but it seems several things are coming together,” said Kirk McDonald, senior analyst at Argent Capital Management.

A “confluence of factors” strengthening dollar including the Federal Reserve raising interest rates, are among them, he said. “Anything that strengthens the dollar is a negative for oil prices.”

But Tyler Richey, co-editor of The 7:00’s Report, said the underlying driver of the energy market is actually the “global production surplus and near-record stockpiles worldwide.” Until U.S. production begins to decline, oil prices are likely to fall even further, “leaving likelihood of a WTI print with a $20 handle more likely in the near term,” said Richey. Still, there are signs that output may soon slow. According to industry group Baker Hughes the U.S. oil-rig count, which is viewed as a proxy for drilling activity, fell by 20 to 516 in the latest week.

Meanwhile, implementation of Iran’s nuclear deal with the West is just days away, according to news reports citing comments from U.S. Secretary of State John Kerry. That’s expected to a significant amount of barrels to the global market.

This week, traders will be taking their cues from the weekly U.S. crude inventory and production data and China’s December trade data. Both will be released on Wednesday.