Fueling Strategy: Please partial fill to tonight, Thursday AM wholesale prices will drop 7 cents – Be Safe Today!
NYMEX Crude $ 27.45 DN $.4900
NY Harbor ULSD $ .9749 UC $.0000
NYMEX Gasoline $ .9425 UP $.0436
NEWS
Oil futures settled below $28 a barrel on Wednesday. West Texas Intermediate prices finished at their lowest level in three weeks, as recent industry reports raised further worries about the outlook for crude demand and a continuing surplus of supplies. Prices managed to get only a brief boost in the immediate wake of data showing a surprise decline in weekly U.S. crude inventories and a fall in domestic production. March WTI crude fell 49 cents, or 1.8%, to settle at $27.45 a barrel on the New York Mercantile Exchange. Based on the front-month contracts, the settlement was the lowest since Jan. 20. That’s when prices settled at a nearly 13-year lowof $26.55. They saw volatility in the wake of Wednesday’s supply data, trading $28.09 before the data and spiking to as high as $29.09 right after the release. April Brent crude on London’s ICE Futures exchange added 52 cents, or 1.7%, to $30.84 a barrel.
The U.S. Energy Information Administration on Wednesday reported that crude inventories fell by 800,000 barrels for the week ended Feb. 5. That is contrary to the 2.4 million-barrel increase reported by the American Petroleum Institute late Tuesday and analysts polled by Platts expected a rise of 3.2 million barrels for the week. EIA and API can differ as survey responders are required to submit supply data to the government, but data are voluntarily reported to the industry group. “We are seeing a volatile digestion of the data and a lot of people were looking for a pop like the one this morning to get short, ”said Tyler Richey, co-editor of The 7:00’s Report. However, “that raises the risk of a short squeeze in the very near term as there will be a lot of new, weak handed shorts in the market despite the ‘less bearish’ underlying production numbers.” So-called “shorts” refers to investors betting that crude prices will fall further. Prices can get a lift when short betters are forced to buy back the assets they borrowed to make their short wagers. Total domestic crude output fell by 28,000 barrels last week to 9.186 million barrels a day, the EIA said.
The oil sell off appeared to shrug off the decline in U.S. oil production and focused, in part, on softer demand growth expectations from the Organization of the Petroleum Exporting Countries’ monthly report, said Rob Haworth, senior investment strategist, U.S. Bank Wealth Management. OPEC said it expects world oil demand to grow by 1.25 million barrels a day this year to average 94.21 million barrels a day. That estimate is down 10,000 barrels a day from the previous forecast.
Markets in 2016 appear obsessed with concern over a potential breakdown in global growth and in commodity markets,” said Haworth. But “a renewed slowdown in U.S. oil production is likely the first sign of the oil market rebalancing.” Still, reports this week had quite a bit of bad news. On Tuesday, a monthly EIA report lowered oil-price expectations for this year and a report from the International Energy Agency Tuesday showed a wider forecast for the global supply surplus.
The EIA Wednesday also reported that motor gasoline supplies and distillate fuel inventories each rose by 1.3 million barrels in the latest week. The Platts survey showed expectations for an increase of 1 million barrels for gasoline stocks and a decline of 1.4 million barrels for distillate stocks, which include heating oil.