Fueling Strategy: Please keep tanks topped today/tonight, Thursday AM wholesale prices will jump up 3.5 cents – Be Safe Today

NYMEX Crude $ 44.74 UP $.5000
NY Harbor ULSD $1.4330 UP $.0193
NYMEX Gasoline $1.4833 UP $.0235

NEWS
Oil prices settled higher Wednesday, lifting their tally of consecutive gains to five, as U.S. government data revealed a sizable weekly decline in domestic crude production, although an unexpected rise in supplies kept gains in check. Some analysts pointed out that the output decline is likely temporary given the effect of storm disruptions to activity in the Gulf of Mexico last week.

August West Texas Intermediate crude added 50 cents, or 1.1%, to settle at $44.74 a barrel on the New York Mercantile Exchange, scoring for a fifth-straight session climb. Brent oil for August delivery rose 66 cents, or 1.4%, to $47.31 a barrel on the ICE Futures Europe exchange. Month to date, WTI and Brent have trimmed their sharp losses to a still substantial 7.3% and 5.4%, respectively, according to FactSet data.

Data from the U.S. Energy Information Administration showed that total domestic crude production fell by 100,000 barrels a day to 9.25 million barrels a day for the week ended June 23. U.S. production was up 580,000 barrels a day year to date just before the latest figures,
said Tyler Richey, co-editor of the Sevens Report. “Last week’s drop of [100,000 barrels a day] offset more than 17% of that increase.” But Matt Smith, director of commodity research at ClipperData, viewed the output decline as a “temporary impact due to the storm in the U.S. Gulf last week impacting offshore production.” Meanwhile, “a large dent in refining activity, and a surprisingly lesser dent than expected to offshore production has meant that oil inventories have eked out a minor build,” he said.

The EIA reported that domestic crude supplies edged up by 100,000 barrels last week. That defied forecasts for a decline of 3.25 million barrels by analysts surveyed by S&P Global Platts, but came in below the increase of 851,000 barrels reported by the American Petroleum Institute.

Tropical storm Cindy hit the Gulf of Mexico last week, and most analysts expected the storm’s disruption to production in the region to prompt a decline in domestic crude stockpiles. “A big 1.4 million-barrel release from the [Strategic Petroleum Reserve] made the supply look higher,” said Phil Flynn, senior market analyst at Price Futures Group. The release is part of a previously planned sale of the reserve oil. Gasoline stockpiles fell by 900,000 barrels, while distillate stockpiles also decreased by 200,000 barrels last week, according to the EIA. The S&P Global Platts survey forecast a decline of 900,000 barrels for gasoline and a climb of 500,000 barrels for distillates, which include heating oil. “The draw to gasoline is not too surprising given lower refinery runs, but was held in check by implied demand dropping on the prior week,” said Smith.

Year to date, WTI oil prices have lost nearly 17% amid investor concerns about rising production from members of Organization of the Petroleum Exporting Countries that are exempt from the supply cut deal and other producers, including the U.S. “Sentiment remains that the market is oversupplied with OPEC members reluctant to further curb production,” said Enrico Chiorando, a U.K.-based analyst at energy consultancy Love Energy. “Having pledged to ‘do whatever it takes’ to support prices, OPEC still faces ever-rising stocks and a hesitancy from producers for deeper cuts.”

Have a great day,

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