Fueling Strategy: Please “FUEL AS NEEDED” prices are down 5 cents but plan on Thursday’s 2.5 cent drop~ Be Safe
NMEX Crude $ 76.64 DN $1.2300
NYMEX ULSD $2.8101 DN $0.0858
NYMEX Gas $2.3169 DN $0.0777
NEWS
March WTI crude oil on Wednesday closed down -1.23 (-1.58%), and Mar RBOB gasoline closed down -7.77 (-3.24%). Crude oil and gasoline prices on Wednesday gave up early gains and settled sharply lower, with crude falling back from a 2-week high. Crude prices turned lower after weekly EIA crude inventories rose more than expected. Crude prices Wednesday initially moved higher on a weaker dollar and Middle Eastern geopolitical risks with the ongoing war in Gaza and continued attacks on commercial shipping in the Red Sea by Houthi militants. Gasoline prices have support amid unexpected refinery outages in the U.S. that reduced gasoline supplies. Recent shutdowns at large refineries, including BP Plc’s Whiting, Indiana facility and a Phillips 66 unit in Ponca City, Oklahoma, have contributed to tighter U.S. gasoline supplies.
A decline in Russian crude oil exports is supportive of crude oil prices. Tanker-tracking data from Vortexa, monitored by Bloomberg, shows Russian crude exports in the week to Feb 11 fell about -290,000 bpd from the prior week to 3.49 million bpd. Strong oil-product consumption in India, the world’s third largest crude consumer, is bullish for oil prices after India’s Jan oil-product consumption rose +8.3% y/y to 20 MMT, the most in 9 months. A bearish factor for crude was a report Sunday from Goldman Sachs Group that said there is a 600,000 bpd downside risk to its forecast for Chinese oil demand in Q4 due to China’s macro policy and a recent surge of electric vehicle sales in the country.
Last Thursday’s comments from Israeli Prime Minster Netanyahu were bullish for crude prices when he said Israel could achieve complete victory over Hamas within months and rejected any talks about a cease-fire. The continuation of the war threatens to escalate and widen throughout the Middle East, a region that accounts for about a third of the world’s oil output. Geopolitical tensions in the Middle East continue to support crude prices. The U.S. and UK have ramped up airstrikes against Houthi rebels in Yemen in retaliation for Houthi attacks on commercial shipping in the Red Sea. Last month, the U.S. Navy advised vessels to avoid the southern Red Sea. Houthis started attacking ships in the Red Sea in mid-November in support of Hamas in the Israeli-Hamas war and said they won’t stop the attacks until Israel ends its assault on Gaza. Attacks on commercial shipping in the Red Sea by Iran-backed Houthi rebels have forced shippers to divert shipments around the southern tip of Africa instead of going through the Red Sea, disrupting global crude oil supplies.
Crude prices also have support from Ukrainian drone attacks on Russian refineries and oil storage facilities that have curtailed Russian fuel exports. On Feb 3, a drone attack by Ukraine damaged Russia’s Lukoil PJSC facility in Volgograd, which processed 289,000 bpd of crude oil in January, or more than 5% of Russia’s total crude processing volume. On Jan 25, a drone attack damaged Russia’s Rosneft PJSC’s major Tuapse refinery on Russia’s Black Sea coast. Russia said on Jan 26 that the Tuapse refinery, which processed 180,000 bpd of crude in the first half of January, will be shut down through at least February. In recent weeks, several Russian oil processing and storage facilities have been targeted and damaged by Ukrainian drone attacks, increasing the risks of reducing Russian crude exports. An increase in crude in floating storage is bearish 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 rose +0.5% w/w to 84.17 million bbl as of Feb 9.
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Loren R Bailey, President
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