Fueling Strategy: Please fill as needed tonight – Be Safe

NYMEX Crude $ 46.08 UP $.2500
NY Harbor ULSD $1.4254 DN $.0058
NYMEX Gasoline $1.4880 DN $.0140

NEWS
Oil prices settled higher Monday following last week’s drop of nearly 4%, as traders look ahead to the weekly update on U.S. petroleum supplies, as well as monthly reports on U.S. shale crude production and global output figures from OPEC and the International Energy Agency due out this week.

July West Texas Intermediate crude tacked on 25 cents, or 0.6%, to settle at $46.08 a barrel on the New York Mercantile Exchange. August Brent crude the global oil benchmark, rose 14 cents, or 0.3%, to $48.29 a barrel on the ICE Futures Europe exchange. WTI prices, however, finished below the session’s best levels as data from the Energy Information Administration released minutes ahead of the Nymex settlement showed expectations for a rise of 127,000 barrels a day in crude production from major U.S. shale plays in July, from June. “There is still a risk that U.S. inventories/shale production will offset the efforts from OPEC nonmembers when it comes to trimming the oversupply in the markets,” Jameel Ahmad, Vice president of market research at FXTM, wrote in emailed commentary, ahead of the shale output data. But oil “looks oversold at $45…until we can see clear signs that there is increased inventories from the United States.”

Rising production activities outside of the Organization of the Petroleum Exporting Countries, particularly in the U.S., prompted UBS last week to cut its 2017 price forecast by more than 6% for WTI oil to $53 a barrel. Eight additional oil rigs were in operation in the U.S. last week, putting the figure at 741, the most since April 2015, according to Baker Hughes

In a report last week, the EIA reported a surprise climb in crude inventories, following nine straight weeks of declines. Supplies of gasoline and distillates also rose. The EIA will issue its next weekly petroleum-supply report on Wednesday.

On Nymex Monday, July gasoline settled at $1.488 a gallon, down 1.4 cents, or 0.9%, while July heating oil shed just over half a penny, or 0.4%, to $1.425 a gallon. July natural gas fell 1.5 cents, or 0.5%, to end at $3.024 per million British thermal units.

OPEC and the IEA will release their monthly oil reports on Tuesday and Wednesday, respectively. They will include figures on the state of global-crude stockpiles. The data will give traders a better picture of whether a global rebalancing is taking place in the oil market. OPEC last month agreed to extend their production-cut pact to March of next year, but the worry is that some OPEC members are getting jittery and possibly cheating. Crude stockpiles in developed nations increased 40 million barrels in the first quarter, according to analysts at Bernstein Research. “The bottom line is that if OPEC are going to successfully defend price, they need to be doing more than they are doing today,” they said in a note.

For now, prices found some support from news Friday of a pipeline leak in Nigeria, which prompted the Shell Development Company of Nigeria to declare force majeure on Bonny light crude oil. Last week, oil saw volatile trading amid renewed diplomatic spats in the Middle East after Saudi Arabia, the United Arab Emirates and other Persian Gulf states severed diplomatic ties with Qatar, an OPEC member. Saudi Arabia and others have long accused Qatar of meddling in their internal affairs and backing terrorism, allegations that Qatar has denied. The rift in the gulf is creating problems for ships transporting fuel.

Have a great day,

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