Fueling Strategy: Please keep tanks topped today/tonight, Wednesday AM wholesale prices will go up 1.5 cents – Be Safe!
NYMEX Crude $ 42.17 UP $1.8100
NY Harbor ULSD $1.2759 UP $0.0612
NYMEX Gasoline $1.5343 UP $0.0266
NEWS
Oil futures rallied to their highest settlement of the year, on speculation that Saudi Arabia and Russia have reached a deal to stabilize production, ahead of a meeting of key oil producers in Doha, Qatar, this weekend.
Adding further support to prices, a U.S. government agency cut its forecasts on domestic crude output for this year and next. West Texas Intermediate crude for May delivery jumped $1.81, or 4.5%, to settle at $42.17 a barrel. That marked the best settlement of the year for a most-active contract, according to FactSet. June Brent oil added $1.86, or 4.3%, to $44.69 a barrel on London’s ICE Futures exchange, which is also a 2016 high.
Interfax, a news provider covering emerging markets such as Russia and China, reported that Saudi Arabia and Russia have reached a consensus to freeze oil production, citing comments from an unidentified source. Oil prices “shot up” on the Interfax report “but really, it should not have been any surprise,” said Phil Flynn, senior market analyst at Price Futures Group. “Let’s face it—the freeze is on.” The oil market may “see a sell the fact after a big rally, he said. Assuming the news is accurate, this is “a historic agreement.” It has been 15 years since the Organization of the Petroleum Exporting Countries and non-OPEC countries have agreed to work together on production, said Flynn. “The market is respecting the fact.” Still, James Williams, energy economist at WTRG Economics, said oil is “moving on headlines more than reality.” For nearly two months, oil prices have been volatile as the market tries to gauge the likelihood of a concerted effort by major oil producing countries tighten supply. The mention of a meeting back in February stoked a buying spree but prices dove when Saudi Arabia, one of the original initiators of the pact, later showed reluctance to participate in the agreement unless Iran pledges to do the same. Tehran has repeatedly showed zero interest in a production freeze at the current level, saying it would keep pumping until production reaches the pre-sanction level of around 4 million barrels a day.
Oil output from Iran in March climbed by 110,000 barrels a day to 3.23 million barrels a day, according to Platts survey of OPEC and oil industry officials and analysts. Still, year to date, WTI oil prices have gained more than 13%. In a monthly report Tuesday, the Energy Information Administration raised its price forecasts on WTI and Brent crude and cut its U.S. oil output estimates for this year and next. But the market’s attention isn’t just on the oil production and the coming meeting.
The American Petroleum Institute will release its weekly report on U.S. petroleum supplies late Tuesday, while the Energy Information Administration issues its own figures Wednesday morning. Analysts surveyed by pricing agency Platts produced a consensus forecast for a one million barrel rise in domestic crude stockpiles in the week ended April 8, driven by stronger imports due to stronger refining margin and sagging U.S. crude output. U.S. gasoline stocks are expected to have contracted by 1.9 million barrels in the same period.