Fueling Strategy: Please partial fill only tonight, Thursday AM wholesale prices will drop 4 cents – Be Safe!
NYMEX Crude $ 30.66 UP $1.6200
NY Harbor ULSD $1.0879 UP $0.0609
NYMEX Gasoline $1.0034 UP $0.0325
NEWS
Oil futures ended sharply higher Wednesday after Iran’s oil minister expressed support for a plan to freeze production by fellow members of the Organization of the Petroleum Exporting Countries and Russia at current levels but stopped short of committing Tehran to abiding by it. Brent crude the global oil benchmark, jumped $2.32, or 7.2%, to end at $34.50 a barrel on London’s ICE Futures exchange, its highest settlement in two weeks. On the New York Mercantile Exchange, West Texas Intermediate futures for March delivery advanced $1.62, or 5.6%, to settle at $30.66 a barrel, the highest settlement since Feb. 5.
The remarks by Iranian oil minister Bijan Zanganeh came after a meeting in Tehran with counterparts from Iraq and Venezuela. A day earlier, Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries reached atentative agreement with Russia to freeze output at January levels, contingent on agreement by Iran and Iraq.Zanganeh said Iran was in favor of action to aid an oil-price recovery, according to the ministry’s Shana website. At the same time, the minister said other countries understand Iran’s special circumstances. The remarks dented hopes for coordinated action by the world’s largest petroleum producers to limit production.
Earlier, an Iranian official was quoted as saying it would be “illogical” for Iran to freeze production as it attempts to push production back toward pre-sanctions levels. Despite Iran’s apparent unwillingness to limit its own production, the remarks offered market bears little additional ammunition, analysts said. “If you’re short, what are you going to do at that point?” said Robert Yawger, director of energy futures at Mizuho. Market attention now turns to supply data, including the closely watched weekly inventories figures from the Energy Information Administration on Thursday, he said.
Meanwhile, skeptics question whether a freeze, even if Iran were to participate, would do much to eliminate the supply glut that has weighed on futures since mid-2014. Even if oil producers all agreed to a global production freeze at January levels, the world would still have about 300 million more barrels a year than needed. In January, Russian production averaged a post-Soviet record of 10.88 million barrels a day, while Saudi Arabia averaged 10.23 million barrels in the same month. “A freeze is not the same as a cut, and somewhat disingenuously, keeping crude production at January levels actually implies higher-than-expected annual output from the four participants and so can hardly tackle the current market oversupply,” analysts at JBC Energy said in a note to clients.
Analysts are expecting an increase in crude oil inventories in a further sign of the continuing oversupply of crude.