Fueling Strategy: Please fill as needed tonight, Tuesday keep tanks topped – Be Safe
NYMEX Crude $ 31.48 UP $1.8400
NY Harbor ULSD $1.0551 UP $0.0296
NYMEX Gasoline $1.0006 UP $0.0412
NEWS
Oil futures rallied Monday as the March West Texas Intermediate contract expired and traders bet that crude production may soon show significant declines to help alleviate the global glut of supplies. Recent data showed a ninth straight weekly decline in the number of active U.S. oil-drilling rigs and a report suggested the market will see a “rebalance” of supply and demand by next year. March West Texas Intermediate crude settled at $31.48 a barrel, up $1.84, or 6.2%, on the New York Mercantile Exchange. That’s a more than two-week high, based on the front-month contracts.
The March WTI contract expired at Monday’s settlement. April crude is now the front-month contract. It rose $1.64, or 5.2%, to settle at $33.39. April Brent crude on London’s ICE Futures exchange tacked on $1.68, or 5.1%, to end at $34.69 a barrel. “The latest drop in the U.S. rig counts, combined with reports of upcoming shale bankruptcies both point to an imminent drop in U.S. oil production,” said Fawad Razaqzada, technical analyst at Forex.com and City Index. Baker Hughes reported Friday that the number of active U.S. rigs drilling for oil fell by 26 to 413, marking the ninth straight week of declines.
Goldman Sachs said the current rig count implied U.S. production declining by 395,000 barrels a day between the last quarter of 2015 to the end of this year. However, despite the gradual decline in U.S. oil production, U.S. crude-oil stockpiles still rose by 2.1 million barrels last week.
Meanwhile, the International Energy Agency said in its medium-term oil outlook report released Monday that oil “supply and demand will gradually rebalance by 2017, with a corresponding recovery in oil prices from around $30 a barrel.” The IEA report forecast that U.S. shale production, in particular, will drop by 600,000 barrels a day this year. “It is easy for consumers to be lulled into complacency by ample stocks and low prices today, but they should heed the writing on the wall: the historic investment cuts we are seeing raise the odds of unpleasant oil-security surprises in the not-too-distant-future,” IEA Executive Director Fatih Birol, launching the report at IHS CERAWeek, said in a statement.
Also, talk of a potential freeze in oil output by members of the Organization of the Petroleum Exporting Countries and non-OPEC Russia is seen as “a positive outcome,” said Razaqzada. Oil prices were volatile last week as hope of a collective production freeze by major producers was largely extinguished by the end of week, despite conditional commitment from Russia, Saudi Arabia, Venezuela, Qatar and Iraq. However, the plan, which calls for oil producers to cap oil output at January levels, failed to garner a pledge from Iran, which reiterated its determination to ramp up production until it reaches pre-sanctions levels of around 4 million barrels a day.
Have a great day,