Fueling Strategy: Keep tanks topped tonight, Friday AM wholesale prices will go UP 3.5 cents – Be Safe Today

NYMEX Crude $ 47.43 DN $.9800
NY Harbor ULSD $1.6210 DN $.0034
NYMEX Gasoline $1.6641 UP $.0452

NEWS
Oil prices ended sharply lower Thursday as pressure from the risk of weaker energy demand in the wake of a potential Category 3 hurricane in the Gulf of Mexico outweighed the typical price boost associated with the prospect of production disruptions in the region. Prices also declined as investors remained cautious as to whether the glut in oil supplies was finally disappearing, as U.S. production has continued its climb to more than two-year highs.

Natural-gas prices, meanwhile, notched only a modest gain as Hurricane Harvey prompted the shut ins of some oil and natural-gas facilities in the Gulf of Mexico. On the New York Mercantile Exchange, October West Texas Intermediate crude fell 98 cents, or 2%, to settle at $47.43 a barrel—the lowest finish in a week. October Brent crude lost 53 cents, or 1%, to $52.04 a barrel on London’s ICE Futures exchange, within the $4 range traded since late July. “The storm is bearish oil, bullish gasoline,” said Matt Smith, director of commodity research at ClipperData. “Refineries in the path of the storm will have to be shuttered, reducing crude demand, and reducing gasoline supply.”

The risk of tighter inventories lifted gasoline futures prices to their highest finish of this month so far. September gasoline jumped 4.5 cents, or 2.8%, to $1.664 a gallon. September heating oil however, settled at $1.621 a gallon, down less than half a cent.
Harvey became a hurricane Thursday, with the National Hurricane Center warning that it expects it to become a “major” hurricane before it reaches the middle Texas coast on Friday. The hurricane has already hurt energy operations in the region. About 9.6% of Gulf of Mexico production, or 167.231 barrels of oil per day have been shut in, while less than half a percent, or 1.135 million cubic feet a day shut in, as of late Thursday morning central time, according to the Bureau of Safety and Environmental Enforcement. On Nymex, September natural gas added 2,1 cents, or 0.7%, to $2.949 per million British thermal units. It saw support as the EIA reported that supplies of the fuel rose by 43 billion cubic feet last week—a bit less than the market expected.

According to the EIA, the Gulf of Mexico region accounts for 17% of total U.S. crude-oil production and 5% of total domestic dry natural-gas production. More than 45% of the nation’s petroleum refining capacity is located along the Gulf Coast, as well as 51% of U.S. natural-gas processing plant capacity. Aside from the storm, inventories have been a key driver for oil. U.S. “oil inventories are now down eight weeks in a row, but combined with gasoline declining it is showing demand has improved domestically,” said Brian Youngberg, senior energy analyst at Edward Jones.

The Energy Information Administration report published Wednesday showed a fall of 3.3 million barrels for U.S. crude inventories in the week ended Aug. 18. It also revealed another rise, however, in total domestic crude supplies, which stands at their highest level in more than two years. Prices for WTI oil have already fallen by more than 11% so far this year, despite efforts by the Organization of the Petroleum Exporting Countries and its allies to rebalance supply and demand in the market. The Joint OPEC-Non-OPEC Ministerial Monitoring Committee on Thursday pegged compliance with their oil-output cut agreement at 94% for July. But “we need to see deeper and consistent production cuts from OPEC, as well as a hefty dent in U.S. output to see a long-term increase in the price of oil,” said Adrienne Murphy, chief market analyst at AvaTrade. “We haven’t seen OPEC do ‘whatever it takes’ to stimulate oil prices. Meanwhile, the break-even [price] point for U.S. shale has fallen, giving scope to produce at lower prices,” she said.

Have a great day,

Loren R. Bailey, President
Fuel Manager Services Inc
“Serving the Trucking Industry Since 1992”