Fueling Strategy: Please keep tanks topped today/tonight, Wednesday AM wholesale prices will be going UP 1.5 cents – Be Safe
NYMEX Crude $ 49.16 DN $1.0100
NY Harbor ULSD $1.6413 DN $0.0261
NYMEX Gasoline $1.6613 DN $0.0153
NEWS
Oil futures retreated Tuesday, with the U.S. benchmark slipping back below $50 a barrel on signs of a pickup in production by Organization of the Petroleum Exporting Countries.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in September fell $1.01, or 2%, to close at $49.16 a barrel, while October Brent crude the global benchmark, lost 94 cents, or 1.8%, to settle at $51.78 a barrel on London’s ICE exchange. The decline ended a six-day win streak for both benchmarks. Crude was under pressure following a Bloomberg survey of analysts, oil companies and ship-tracking data estimated OPEC crude output rose 210,000 barrels a day in July.
“At the current OPEC production level, the oil market is likely to show a supply deficit of only around 500,000 barrels per day in the second half of the year. In other words, OPEC will not achieve its goal of completely eliminating the oversupply by year’s end,” said Eugen Weinberg, analyst at Commerzbank, in a note. Matt Smith, director of commodity research at ClipperData said that although a number of factors continue to be supportive to higher crude prices, recent reports showing production increases are providing a slight headwind in recent trade. “Libyan crude hitting the market closed out last month at 900,000 barrel a day so that is counteracting the effort to try and tighten this market,” Smith said, referencing ClipperData’s own output statistics.
The problem of faltering discipline in a global, concerted effort to curb production is expected to be discussed at a meeting of OPEC officials in Abu Dhabi next week. Trades are awaiting inventory reports from the American Petroleum Institute later Tuesday as well as a further report from EIA late Wednesday. Analysts say a swath of positive news the past two weeks, such as ebbing U.S. inventories and slowing production, have lifted investor confidence in oil, which has been in the doldrums due to a large, persistent supply glut. That upbeat mood had helped push the U.S. benchmark back above $50 a barrel for the first time in two months. Even EIA data on Monday revealed that U.S. growth might be easing, as May’s growth was the second slowest of 2017.
Rising U.S. shale production this year has been a thorn in the eye of OPEC and other non-cartel countries, including Russia, that have agreed to cut production in an effort to rebalance the oil market. Still, recent “market sentiment has quite clearly turned, with price falls being viewed as an opportunity to buy, as can be seen from the marked increase in speculative net long positions,” analysts at Commerzbank said in a note. Oil investors also monitored political developments in Venezuela—a member of OPEC and a major exporter of oil to the U.S.—after a referendum over the weekend that gave Venezuelan President Nicolás Maduro overwhelming power to redraft the country’s constitution. The U.S. on Monday imposed sanctions against Maduro, but didn’t include threatened measures against the country’s petroleum industry.
Have a great day,
Loren R. Bailey, President
Fuel Manager Services Inc
“Serving the Trucking Industry Since 1992”