Fueling Strategy: Please fill as needed tonight – Be Safe

NYMEX Crude $ 44.76 DN $.6500
NY Harbor ULSD $1.4163 UP $.0040
NYMEX Gasoline $1.3835 UP $.0127

NEWS
Oil futures settled at their lowest level in two months on Monday after a survey revealed that crude production from members of the Organization of the Petroleum Exporting Countries has climbed to a nearly eight-year high.

The report exacerbates concerns that global output is set to climb as recent supply disruptions ease. OPEC’s June crude production rose 300,000 barrels a day from a month earlier, to 32.73 million barrels a day, which is the highest level since August 2008, according to S&P Global Platts. August West Texas Intermediate crude lost 65 cents, or 1.4%, to settle at $44.76 a barrel on the New York Mercantile Exchange. The September contract for global benchmark Brent crude fell 51 cents, or 1.1%, to finish at $46.25 a barrel on the ICE Futures exchange in London. WTI and Brent crude prices both settled Monday at their lowest levels since May 10, after losing more than 7% last week. “There is a concern that demand might be falling when supply might be on the rise,” Phil Flynn, senior market analyst at Price Futures Group, told MarketWatch in an email. “Not only is the market expecting the return of Canadian oil, [but] we may see more oil out of Nigeria and Libya,” he said. “Iran is boasting that they are getting ready to boost output as well.”

The OPEC survey from S&P Global Platts, which said crude production in Nigeria and Libya “tentatively recovered,” added pressure to oil prices Monday. “As for OPEC output, the [second half of the year] story is likely to be dominated by the same thing that really dominated the first half—supply disruptions,” said Robbie Fraser, commodity analyst at Schneider Electric, told MarketWatch. “Nigerian militants will continue to challenge the country’s production, Libya’s attempt at unity still faces many obstacles and Venezuela’s PDVSA faces looming default.”

Meanwhile, Morgan Stanley said in a note that refiners across the world are overproducing petroleum products. If the products market becomes oversupplied, it could ripple back to lessen crude demand this week which is “not helpful for oil balances and prices.” Flynn pointed out that energy “demand is suspect” because of ongoing uncertainty stemming from the U.K. exit from the European Union, also known as Brexit.

Other factors affecting prices this week include the U.S. ramping up its rig count. On Friday, industry group Baker Hughes Inc. reported that the number rigs looking for oil in the U.S. rose by 10, the fifth increase in the past six weeks, bringing the total rig count to 351. The U.S. oil-rig count is typically viewed as a proxy for activity in the sector. After peaking at 1,609 in October 2014, low oil prices put a downward pressure and the rig count fell sharply. “Any suspicion that U.S. producers are increasing their output will spook investors because the outlook for global demand growth is still not very clear,” said Gao Jian, an energy analyst at SCI International.

Gao said profit-taking in oil prices following Friday’s rise shows many investors are still unsure of oil’s midterm future, especially in the face of a growing glut of fuel products, such as gasoline, in the market.