Fueling Strategy: Please keep tanks topped tonight – Be Safe

NYMEX Crude $ 48.16 DN $.0300
NY Harbor ULSD $1.4788 DN $.0043
NYMEX Gasoline $1.6339 DN $.0150

NEWS
Oil futures pared back much of their earlier losses on Thursday, but prices held ground near their lowest level in week on the back of a stronger dollar and a surprise weekly increase in U.S. crude stockpiles, The fall comes after a rally in recent sessions fueled by production outages in Africa and Canada and production declines across the globe that have propelled expectations of shrinking the global oversupply.

West Texas Intermediate crude for delivery in June traded at $47.68 a barrel, down 51 cents, or 1.1%, on the New York Mercantile Exchange after trading as low as $46.73. A settlement around this level would be the lowest since May 13. July Brent crude on London’s ICE Futures exchange fell $1.31, or 2.7%, to $47.62 a barrel. “Intraday, oil was getting quite oversold, on increasing volume,” said Nico Pantelis, head of research at Secular Investor. The cut in losses seems “like a counter move, in a new short-term downtrend, to work off some of the oversold conditions,” he said.

Petroleum prices remain under selling pressures as “part of a wider risk-off trade flow across a wider range of commodities as the U.S. dollar index has extended its recent rally,” Tim Evans, an energy analyst at Citi Futures and OTC Clearing, said in a note. A range of markets are adjusting “for what is seen as an increased chance that the U.S. [Federal Reserve] will hike interest rates as early as June,” he said. The oil market “may have also been due for a technical correction as the shock of recent production outages in Nigeria and Canada fade.”

The June contract for WTI will expire Friday, which may contribute to volatility. Oil prices had started their descent late Wednesday after minutes of the Fed’s April meeting indicated that the central bank could raise U.S. interest rates as early as next month. Higher rates tend to push up the value of the dollar, because it becomes more attractive to yield-seeking investors.

On Thursday, the ICE U.S. Dollar Index rose 0.2%, trading about 0.7% higher week to date. “The U.S. dollar is gaining momentum, putting extra pressure on the commodity complex as a whole,” said Pantelis. “Oil could stay under pressure in the coming days, even weeks.” “Look for oil to drop further towards the lower band of $40 per barrel,” but prices aren’t likely to drop toward the February lows around $26, he said.
On Wednesday, the Energy Information Administration reported that crude-oil inventories unexpectedly rose by 1.3 million barrels to 541.3 million barrels for the week ended May 13. Still, demand for refined products including gasoline and distillates such as diesel fuel rose to more than 20 million barrels a day, the EIA estimated, the highest weekly level since January. Weekly inventories of gasoline and distillates fell.