Fueling Strategy: Please have all tanks topped tonight before 23:00 CST – Wednesday AM wholesale prices will jump UP 3 cents – Be Safe Today!
NYMEX Crude $ 31.87 DN $1.5200
NY Harbor ULSD $1.0221 DN $0.0330
NYMEX Gasoline $ .9663 DN $0.0343
NEWS
Crude futures settled with a sharp loss on Tuesday after Saudi Arabia’s oil minister, Ali al-Naimi, shattered any hopes that producers would cut back on output to help alleviate the world’s excess supplies.
April West Texas Intermediate crude fell $1.52, or 4.6%, to settle at $31.87 a barrel on the New York Mercantile Exchange. April Brent crude on London’s ICE Futures exchange fell $1.42, or 4.1%, to $33.27 a barrel. At the IHS CERAWeek conference in Houston Tuesday, al-Naimi said there is “no sense wasting our time seeking production cuts.” He also said he has no concerns about demand, so he welcomes additional supplies, including shale oil. “There was nothing new from the Saudi oil minister, whose rhetoric fell in line with everything we have heard from him for well over a year: that Saudi will not be cutting production,” said Matt Smith, director of commodity research at ClipperData.
Saudi Arabia has the biggest pull in the Organization of the Petroleum Exporting Countries as the group’s largest crude-oil producer and exporter. “Given recent developments with Russia and other OPEC members, some appear to have placed hope in [the Saudis]; once again their hopes have been dashed,” said Smith. Al-Naimi said a freeze in output would allow oil supplies to fall, but it would take time. Tyler Richey, co-editor of The 7:00’s Report said the “wild card” when it comes to plans for a production freeze “remains Iranian production as officials there have explicitly said that they plan to continue raising output until their exports are back towards pre-sanction levels.” That could mean as much as another 1 million barrels a day in capacity, Richey said. During his speech, al-Naimi said that while oil is in a “painful downturn,” the market will return to balance and demand will pick up. OPEC Secretary-General Abdalla Salem el-Badri said on Monday that a proposed coordinated production freeze, if agreed upon by all OPEC members, would mark the a first step to support prices. However, a price increase would embolden U.S. producers to ramp up output, he added.
Oil prices Monday had gained on expectations for a fall in crude production following nine-straight weeks of declines in the number of active oil-drilling rigs. But “the pace of production declines in the U.S. right now is simply not enough to absorb the global production surplus that will likely only get worse with Iran set on continuing to increase output,” said Richey.