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Market Close: Aug 02 Down, Diesel DN $.0191, Gas DN $.0972

Fueling Strategy: Please “KEEP YOUR TANKS TOPPED” today/tonight, Thursday prices will go UP 4 Cents, Friday look for a 2 cent drop~Be Safe

NMEX Crude      $ 79.49 DN $1.8800

NYMEX ULSD     $3.0043 DN $0.0191

NYMEX Gas       $2.7778 DN $0.0972

NEWS

September WTI crude oil on Wednesday closed down -1.88 (-2.31%), and Sep RBOB gasoline closed down -9.72 (-3.38%).

Crude oil and gasoline prices Wednesday closed sharply lower.  Crude prices fell back from a 3-1/2 month high and retreated after a plunge in stocks sparked risk-off sentiment in asset markets that undercut crude prices.  Also, Wednesday’s rally in the dollar index to a 3-week high was bearish for energy prices.  Crude prices briefly recovered their losses after weekly EIA crude inventories fell more than expected.

Fitch Ratings late Tuesday cut the sovereign credit rating of the U.S. by one level to AA+ from AAA, which sent stocks tumbling and sparked a risk-off sentiment in asset prices.

Crude oil prices have support from hopes China will implement policies to revive economic growth.  Last week’s Politburo meeting laid out a pre-growth tone that was more dovish than markets expected.  The ruling Communist Party’s 24-member Politburo, China’s top decision-making body led by President Xi Jinping, promised “counter-cyclical” policies, which imply an easing bias.

A bullish factor for crude oil is a decline in Russian crude shipments.  Vessel-tracking data monitored by Bloomberg showed Russian crude oil shipments in the four weeks to July 30 dropped to a 7-month low of 2.98 million bpd.

In a supportive factor for oil prices, Saudi Arabia last month said it would extend its unilateral 1 million bpd production cut through August, keeping Saudi Arabia’s crude output at about 9 million bpd, the lowest level in several years.  Also, Russia voluntarily pledged to cut 500,000 bpd of crude output in August.  Also, OPEC crude production in July fell -900,000 bpd to a 1-3/4 year low of 27.79 million bpd.

A decline in crude in floating storage is bullish for prices.  Monday’s weekly data from Vortexa showed that the amount of crude oil held worldwide on tankers that have been stationary for at least a week fell -2.2% w/w to 105.06 million bbl as of July 28.

An improvement in Chinese crude demand is bullish for prices after government trade data showed China’s June crude imports rose +4.6% m/m to 12.72 million bpd, the most in three years.

A decline in crude demand in India, the world’s third-biggest crude consumer, is bearish for oil prices.  India’s Jun crude oil imports fell -1.3% y/y to 19.7 MMT, the lowest in 7 months.

Wednesday’s weekly EIA report was mixed for crude prices.  On the bearish side, EIA gasoline supplies unexpectedly rose +1.48 million bbl versus expectations of a -1.55 million bbl decline as implied U.S. gasoline demand on a four-week rolling basis fell for a fourth straight week.  On the bullish side, EIA crude inventories plunged by a record -17.05 million bbl, a much larger draw than expectations of -1.05 million bbl.  Also, EIA distillate stockpiles unexpectedly fell -791,000 bbl versus expectations of a +100,000 bbl build.  In addition, crude supplies at Cushing, the delivery point of WTI futures, fell -1.26 million bbl.

Wednesday’s weekly EIA report showed that (1) U.S. crude oil inventories as of July 28 were -1.6% below the seasonal 5-year average, (2) gasoline inventories were -6.3% below the seasonal 5-year average, and (3) distillate inventories were -14.6% below the 5-year seasonal average.  U.S. crude oil production in the week ended July 28 was unchanged w/w at 12.2 million bpd.  U.S. crude oil production is well below the Feb-2020 record-high of 13.1 million bpd.

Baker Hughes reported last Friday that active U.S. oil rigs in the week ended July 28 fell by -1 rig to a 16-1/2 month low of 529 rigs.  That is well below the 3-1/4 year high of 627 rigs posted on December 2, 2022.  Still, U.S. active oil rigs are more than triple the 18-year low of 172 rigs seen in Aug 2020, signaling an increase in U.S. crude oil production capacity from pandemic lows.

Have a Great Day,

Loren R Bailey, President

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Categories: Fuel News
loren: Fuel Manager Services Inc. "Serving the trucking industry since 1992" I've been in and around the trucking industry for 45-years beginning in owner operator operations at Willis Shaw Express. I bought a small trucking company that I ran for 6-years then sold and went to work for J.B. Hunt Transport in 1982. After 10-years with Hunt, I started Fuel Manager Services, Inc., we are in our 29th year of serving the American trucking companies. Our simple goal was and is to bridge the gap between the trucking companies and the fuel suppliers.