Fueling Strategy: Fill as needed tonight, Tuesday keep tanks topped as wholesale prices will go back up slightly Wednesday AM – Be Safe Tonight!
NYMEX Crude $ 36.76 DN $.2800
NY Harbor ULSD $1.1264 UP $.0025
NYMEX Gasoline $1.2907 UP $.0197
NEWS
Growing tension between Saudi Arabia and Iran fueled volatile trading on Monday, with oil prices ultimately finishing lower as traders worried that an unstable political situation in the Middle East would complicate the outlook for oil in 2016.
February West Texas Intermediate crude shed 28 cents, or 0.8%, to settle at $36.76 a barrel on the New York Mercantile Exchange. It traded as high as $38.39 and as low as $36.33. February Brent crude settled down 6 cents, or 0.2%, to $37.22 a barrel on London’s ICE Futures exchange, reversing course after an earlier high of $38.99.
Saudi Arabia on Sunday severed diplomatic ties with Iran, a fellow member of the Organization of the Petroleum Exporting Countries. The Saudi move came as hundreds of Iranians protested against the kingdom’s Saturday execution of Nemer al-Nemer, a prominent Shiite cleric. “If the situation becomes more forceful between the two countries—Saudi Arabia and Iran—it could bring an enormous spike for the oil price,” said Naeem Aslam, chief market analyst at AvaTrade.
But overall, the tension between two major producers is adding to the unpredictability of oil prices, which slumped to multiyear lows in 2015 amid a supply glut. Expectations for more barrels coming on stream from Iran this year were a key factor in oil’s tumble, after an international agreement over its nuclear program paved the way for an expected end this year to Western sanctions on buying its oil. “Nothing has changed fundamentally, and global oil producers are going to continue pumping near max capacity for the foreseeable future … and as a result, likely keep a lid on prices near $40 a barrel,” said Tyler Richey, co-editor for The 7:00’s Report.
It still remains unlikely for Saudi Arabia and Iran, among the five biggest OPEC oil producers, “to go to war against each other, which is really the only way this political ‘flare up’ would materially push prices higher,” potentially toward $50 or more, Richey said. Still, an escalation of tensions between two of the Middle East’s key regional powers could delay a further slide in prices. There is “rising uncertainty over how this conflict might affect the expected lift of sanctions on Iran,” said Gao Jian, an energy analyst at Guangzhou, China-based SCI International. “Any possibility of a delay or a cancellation of the ban lift will be positive to oil prices.