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

NYMEX Crude $ 47.72 UP $1.5100
NY Harbor ULSD $1.4401 UP $0.0370
NYMEX Gasoline $1.6114 UP $0.0181

NEWS
Oil futures rallied more than 3% on Monday after Goldman Sachs said that the market is now in a supply shortfall, boosting prices for a commodity that has been under pressure from a severe glut for almost two years.

June West Texas Intermediate crude rose $1.51, or 3.3%, to settle at $47.72 a barrel on the New York Mercantile Exchange, the highest settlement since early November. Brent crude for July delivery gained $1.14, or 2.4%, to $48.97 a barrel.

Goldman Sachs said that the recent outages from large producers such as Canada and Nigeria had sent the oil market from near full storage levels to a deficit. “All of a sudden, in a major about face, Goldman Sachs is now saying that the global oil market has gone back to a supply deficit for the first time in two years,” said Phil Flynn, senior market analyst at Price Futures Group, in a note, pointing out that Goldman Sachs has been “one of the biggest oil bears on the street.” They are “starting to realize that the line between an oversupply and a deficit is a lot thinner than people think,” said Flynn.

Goldman Sachs still predicts tough times ahead for the sector, saying that low-cost oil producers could push the market back into surplus by early 2017. The bank remains relatively negative on the price outlook, cutting its long-term price forecast to $45 a barrel for the first quarter of 2017 and $60 a barrel by the end of next year. Still, new production outages in Nigeria, caused by attacks on infrastructure, are likely to continue supporting oil in the short term. They come just as concerns over supply in Canada are starting to fade as its oil fields restart following shutdowns caused by wildfires. These disruptions to supply are taking oil out of the market just as Iran is pumping more crude, said analysts at Barclays, which predicted the outages to last throughout this month and perhaps longer.

The analysts said the biggest driver in the oil price is the uptick in global demand. A mild northern hemisphere winter sapped energy consumption, but strong demand from China and India are helping to support oil prices. “The most significant upward revisions to demand have been made in China, where the effect of the government stimulus package has improved what was a very weak picture for diesel demand,” Barclays said. Chinese independent oil refiners, known as “teapots,” are driving some of that demand, with even the world’s major oil producers now offering to supply cargoes. S&P Global Platts reported Monday that the Saudi Arabian Oil Company, known as Saudi Aramco, was loading a cargo of crude oil that will eventually be delivered to independent Chinese refiner Shandong Chambroad Petrochemicals Co. That would be the first delivery to that market from a major oil producer. “Soaring demand, in part caused by low prices and falling non-OPEC oil output, is sending oil back on an upward trajectory,” said Flynn. “This comes as the U.S. oil rig count plunges for the eighth week in a row and major oil players Saudi Arabia, Oman and Bahrain get downgraded by Moody’s.” A monthly U.S. government report Monday showed that oil output from seven major domestic shale plays is expected to fall by 113,000 barrels a day to 4.96 million barrels a day in June. “If demand continues to hang in there and the global economy has no shocks, we will be on a new bull cycle and start to cut into global oil inventories,” Flynn said.