Fueling Strategy: Please partial fill tonight, Wednesday AM wholesale prices will drop 6 cents then will jump back UP Thursday 3.5 cents – Be Safe!
NYMEX Crude $ 31.45 UP $1.1100
NY Harbor ULSD $ .9677 UP $0.0324
NYMEX Gasoline $1.0472 UP $0.0172
NEWS
Oil futures finished higher on Tuesday on hopes that members of the Organization of the Petroleum Exporting Countries and producers outside the cartel may reach an agreement to cut output to stem the persistent slump in oil prices.
March West Texas Intermediate crude rose $1.11, or 3.7%, to settle at $31.45 a barrel on the New York Mercantile Exchange after tapping a low earlier at $29.25. Prices had lost 5.8% on Monday. March Brent crude the global oil benchmark, ended at $31.80 a barrel, up $1.30, or 4.2%—recovering from an intraday low of $29.27. Prices got a boost on “the possibility of an emergency OPEC meeting and possible price coordination,” said Robbie Fraser, commodity analyst at Schneider Electric. But “as Iran attempts to rapidly increase exports and Saudi Arabia signals little willingness to cut production, OPEC’s ability to boost prices remains virtually nonexistent.”
Still, prices held above $31 a barrel after two members of OPEC hinted that they’re ready to curb production if nations outside the group do the same. Kuwait’s OPEC Governor Nawal al-Fuzaia said at an energy conference in Kuwait City that “OPEC is willing to cooperate with producers outside the group if they show that they are serious about cooperating,” according to Dow Jones Newswires. Additionally, the Iraqi oil minister, Adel Abdul Mahdi, said there are signs that top oil exporters Saudi Arabia and Russia have become more flexible in considering a production cut, according to the news outlet. The odds on Tuesday were stacked in favor of a production cut, said Naeem Aslam, chief market analyst at AvaTrade. It appears that both OPEC and non-OPEC players “may call it a day and come to the table where they address the supply.” If an agreement on an output cut it reached, oil prices may target $40, then move toward $50, said Aslam.
Still, a supply-demand mismatch has kept oil prices in the doldrums for nearly two years and there are few signs the market will balance itself soon. “Based on current market dynamics, and with Iran forecast to slowly hike supplies through 2016, the market looks likely to carry an average surplus of around 1 million barrels a day,” said Matt Parry, senior oil analyst at the International Energy Agency. That’s down “substantially” compared with 2015, when it was nearer to 2 million barrels a day, but it’s “still fairly sizable.” Hopes of a production cut by Saudi Arabia, OPEC’s largest producer, dimmed early this week after the chairman of Saudi Arabian Oil Co., or Saudi Aramco, said Monday his country could weather the low prices for “a long, long time.” Iraq’s robust oil exports are also worsening market sentiment. The country exported 99.7 million barrels of oil in December at an average price of $29.288 a barrel, according to data released by the Ministry of Oil on Monday, the second highest export volume in 2015 but the lowest in dollar terms. “Similar quantities of additional oil will also be coming out of Iran in the next few months, meaning that the oversupply on the oil market will be fed from two sides at once,” analysts at Commerzbank said in a note.
The resilience of U.S. producers is also fanning fears of a growing oil glut. According to a survey by pricing company Platts, U.S. crude stockpiles likely expanded by 3.5 million barrels last week. The official supply data from the Energy Information Administration will be released Wednesday.