Fueling Strategy: Please partial fill only today/tonight, Be Safe Today

NYMEX Crude $ 47.33 UP $1.4500
NY Harbor ULSD $1.4754 UP $0.0333
NYMEX Gasoline $1.5396 UP $0.0501

NEWS
Oil futures rallied Wednesday, posting their largest one-day gain since December, after U.S. government data revealed the biggest weekly decline in domestic crude supplies so far this year.

June West Texas Intermediate crude rose $1.45, or 3.2%, to settle at $47.33 a barrel on the New York Mercantile Exchange. Prices scored the biggest one-day dollar and percentage gain since Dec. 1, according to FactSet data. That’s the day after the Organization of the Petroleum Exporting Countries announced an agreement to cut production. July Brent crude added $1.49, or 3.1% to $50.22 a barrel on London’s ICE Futures exchange—reclaiming the $50 level for the first time in a week.

Early Wednesday, the U.S. Energy Information Administration reported that domestic crude supplies dropped by 5.2 million barrels for the week ended May 5. That was larger than the fall of 1.8 million barrels forecast by analysts polled by S&P Global Platts, though the American Petroleum Institute late Tuesday reported a 5.8 million-barrel drop.

“The largest draw to crude inventories so far this year is the bullish catalyst behind today’s report, driven by a drop in crude imports, and in spite of a big drop in refining activity last week,” said Matt Smith, director of commodity research at ClipperData. “The drop in crude inventories primarily relates to poor weather in the Gulf of Mexico last week, disrupting imports,” he said, adding that Gulf Coast inventories dropped by 6.4 million barrels.

Total U.S. crude production edged up by 21,000 barrels to 9.314 million barrels a day, EIA data showed. “The data [are] spurring speculation that U.S. production growth is slowing, while inventories have started to fall in recent weeks,” said Tyler Richey, co-editor of the Sevens Report. “If U.S. output continues to level off, supplies continue to decline, and OPEC can agree to, at the very least, extend their quota policy into [the second half of the year], that will be supportive of prices establishing a near-term bottom.” Richey warned, however, that “fundamentals are not yet pointing to a decided break higher in oil prices any time soon, and therefore more range-bound trade in the high $40’s to low $50’s is likely.”

The EIA also said that gasoline stockpiles declined by 200,000 barrels, while distillate stockpiles were down 1.6 million barrels last week. On Nymex, June gasoline added 3.4% to $1.540 a gallon and June heating rose 2.3% to $1.475 a gallon. “The demand proxy for gasoline turned higher this week, but we only saw gasoline stocks fall by 200,000 barrels as gasoline imports surged” by 260,000 barrels per day, said Troy Vincent, oil analyst at ClipperData. The data come ahead of a much-anticipated meeting of major oil producers on May 25. The general expectation is that members of Organization of the Petroleum Exporting Countries, as well as some non-OPEC producers including Russia, will extend the current output cuts into the second half of this year, or longer.

Have a great day,

Loren R. Bailey, President
FUEL MANAGER SERVICES INC
“Serving the Trucking Industry Since 1992”