Fueling Strategy: Please fill as need tonight, Wednesday AM we’ll see a small drop of one penny – Be Safe Tonight!
NYMEX Crude $ 37.87 UP $1.0600
NY Harbor ULSD $1.1295 UP $0.0391
NYMEX Gasoline $1.2760 UP $0.0434
NEWS
Energy futures jumped Tuesday, with natural gas leading the way in the wake of winter storms and forecasts for colder weather in the U.S.
Natural gas for February delivery on the New York Mercantile Exchange the most actively traded contract, jumped 11.4 cents, or 5.1%, to $2.37 per million British thermal units, the highest level since mid-November. January. Nearby January futures rose 14.4 cents, or 6.5%, to $2.372 per million British thermal units. Natural gas earlier this month fell to a 14-year low, but has jumped more than 60 cents in a little more than a week on indications of strengthening seasonal demand in coming weeks, short covering, and reports of production shut-ins in the Permian Basin, located in western Texas and southeastern New Mexico, as a result of winter storms, wrote analysts at Tradition Energy, in a note. The analysts said upside might be limited, however, due to “record storage levels of gas, robust production levels, and expectations that the cold weather that is forecast for the first part of next month will last for less than a week.”
Meanwhile, oil futures took back much of the ground lost in the previous day’s rout. On the New York Mercantile Exchange, light, sweet crude futures for delivery in February rose $1.06, or 2.9%, to finish at $37.87 a barrel. The U.S. benchmark remains down more than 9% since the end of November and is on track for a 2015 decline of nearly 29%. February Brent crude on London’s ICE Futures exchange added $1.17, or 3.2%, to finish at $37.79 a barrel. The global benchmark is down more than 15% in December and is on track for a 2015 drop of more than 34%. On Monday, both Nymex and Brent fell more than 3% after weak data out of China and Japan stoked concerns about demand.
Traders will be mostly taking cues from this week’s U.S. official crude stockpiles and production data to be released on Wednesday. Later Tuesday, the American Petroleum Institute will release its estimate of inventories of crude oil and energy products. Historically large U.S. crude inventories, Iran’s expected full resumption of oil supply to the market, coupled with the Organization of the Petroleum Exporting Countries’ confirmation last week that output by its members will continue to grow next year, all point to a bigger global overhang in the future. “For 2016, we are once again fairly confident of a first-half supply and demand surplus, with weaker seasonable demand for oil and a likely increase in total OPEC supply to 32 million barrels per day or more as sanctions against Iran are lifted,” said Tim Evans, a Citi Futures analyst, in a note.
While demand for crude will likely remain in the doldrums in the coming months, analysts were upbeat about demand for gasoline as auto sales in China got a boost from a new tax-break and drivers in America take advantage of cheaper gasoline prices.