Fueling Strategy: Please keep tanks topped tonight, Friday AM wholesale prices will jump UP 6 cents – Be Safe Today!

NYMEX Crude $ 46.70 UP $.4700
NY Harbor ULSD $1.3940 DN $.0027
NYMEX Gasoline $1.5833 UP $.0018

NEWS
Oil futures settled with a gain following a volatile session on Thursday, buoyed by expectations that declines in global production will ease the glut of crude supplies. Prices had spent part of the session in negative territory, pressured by growing output in Iran. “The trading market has limited confidence in any major direction,” said Richard Hastings, macro strategist at Seaport Global Securities. “This has been the pattern for a couple of months.”

On the New York Mercantile Exchange, June West Texas Intermediate crude rose 47 cents, or 1%, to settle at $46.70 a barrel after earlier dipping to a low at $45.61. The settlement was the highest for futures prices since Nov. 3. Brent crude rose 48 cents, or 1%, to $48.08 on London’s ICE Futures exchange. The oil market is “still over-supplied, and likely to remain so through 2016, as very strong gains in Iranian supplies (back up towards pre-sanctions levels at an incredible pace) more than offset” continued supply declines from producers outside of the Organization of the Petroleum Exporting Countries, Matthew Parry, senior oil analyst at International Energy Agency, told Market Watch.

A monthly report by the IEA released Thursday said that global oil inventories will experience a “dramatic reduction” in the second half of the year on the back of strong demand and falling supply by some major producers. A series of production outages around the globe have also taken barrels out of the market in recent weeks, providing support to prices. Still, the Paris-based agency said that global oil stocks will continue to increase in the first half of the year as Iran ramps up its production, adding to the nearly two years of oversupply that saw prices dropping to decade lows.

Parry expects a global stock build of over 1 million barrels a day in the first half of 2016, with that rise moderating to around 200,000 barrels a day in the second half. But that’s “still a build,” he said. “The oil market right now is like a very full bath, running precariously close to capacity and with the taps on full,” said Parry. “Soon the taps are going to be turned down but not off, [with] stocks will likely continue to build but at a much reduced pace.” In its report, the IEA said that the rise in Iran’s oil production and exports after the lifting of international sanctions has been “faster than expected.” Iran increased daily oil output by 300,000 barrels in April to 3.56 million barrels a day, a level last achieved in November 2011.

That helped to raise the combined output of OPEC last month to 32.76 million barrels a day, the highest since April 2008. The growth in Iranian output is a “factor that would have surely dampened market sentiment further had it not been for recent declines elsewhere,” notably Nigeria due to pipeline sabotage, and Kuwait, due to the workers’ strike in April, said Parry. According to the IEA, outages in Nigeria, Ghana and Canada have exceeded 1.5 million barrels a day so far. In the U.S., crude output declined for a ninth straight week, according to the Energy Information Administration Wednesday. Adding further support to prices was renewed speculation, fueled by reported comments from an Iraqi deputy oil minister, that OPEC may again discuss an output freeze at its meeting next month, according to Phil Flynn, senior market analyst at Price Futures Group.