Fueling Strategy: Please “FUEL AS NEEDED” prices are down 2.5 cents but plan on Friday’s 8.5 cent drop~ Be Safe

NMEX Crude      $ 78.03 UP $1.3900

NYMEX ULSD     $2.8237 UP $0.0136

NYMEX Gas       $2.3183 UP $0.0014

NEWS

March WTI crude oil on Thursday closed up +1.39 (+1.81%), and Mar RBOB gasoline closed up +0.14 (+0.06%). Crude oil and gasoline prices on Thursday finished moderately higher.  A weaker dollar Thursday was supportive of energy prices.  Also, concern the Israel-Hamas war could escalate and disrupt crude supplies from the Middle East is bullish for oil prices after Israel said it killed a commander of Hezbollah in an airstrike in Lebanon, and Lebanon warned of a wider conflict.  In addition, Israel said it ended ceasefire talks with Hamas, citing “delusional” Hamas demands. A negative factor for crude prices was Thursday’s report from the International Energy Agency (IEA) that said the crude market could be in surplus all during 2024.  The IEA predicted global oil demand in 2024 will increase by +1.2 million bpd, just half last year’s rate.  Also, the IEA said cuts to crude production by OPEC+ have been smaller than announced, with the group’s crude output falling by just -330,000 bpd in January, much less than the announced cuts of -900,000 bpd.

Thursday’s global economic news was mixed for energy demand and crude prices.  On the bearish side, U.S. Jan retail sales fell -0.8% m/m, weaker than expectations of -0.2% m/m and the biggest decline in 10 months.  Also,  U.S. Jan manufacturing production unexpectedly fell -0.5% m/m, weaker than expectations of no change.  In addition, the ECB cut its 2024 Eurozone GDP forecast to 0.8% from a November estimate of 1.2%.  Finally, Japan’s Q4 GDP unexpectedly contracted -0.4% (q/q annualized), weaker than expectations of +1.1%.  On the positive side, U.S. weekly initial unemployment claims unexpectedly fell -8,000 to 212,000, showing a stronger labor market than expectations of an increase to 220,000.  Also, the U.S. Feb NAHB housing market index rose +4 to a 6-month high of 48, stronger than expectations of 46.

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 ceasefire.  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.

Have a Great Day!

Loren R Bailey, President

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