Fueling Strategy: Please fill as needed today/tonight – Be Safe

NYMEX Crude $ 43.13 DN $1.0600
NY Harbor ULSD $1.3228 DN $0.0342
NYMEX Gasoline $1.3336 DN $0.0279

NEWS
Oil futures settled Monday at their lowest level in three months as the prospect of more oil-drilling activities in the U.S., a glut of petroleum-product supplies and an expected slowdown in domestic refining activities renewed worries that inventories of crude will continue to outpace consumption. “Supply continues to return from disruptions, refined products are severely oversupplied, crude demand is falling well short of product demand and key product demand is decelerating,” analysts at Morgan Stanley said in a note dated Sunday.

September West Texas Intermediate crude fell $1.06, or 2.4%, to settle at $43.13 a barrel on the New York Mercantile Exchange. That was the weakest settlement for a most-active contract since April 25, according to FactSet data. September Brent crude on London’s ICE Futures exchange fell 97 cents, or 2.1%, to $44.72 a barrel.

“Given the oversupply in the refined product markets, fading refinery margins and economic run cuts, we expect crude oil demand to deteriorate further over the coming months,” Morgan Stanley analysts said. They cut their global refinery demand forecast for crude oil runs to 625,000 barrels a day from 800,000 barrels a day due to “poor [year to date] performance and expected run cuts, with downside risk to these low numbers.” Daniel Holder, commodity analyst at Schneider Electric, said that “oversupply awareness is heightened at the moment as the market weighs the looming refiner’s maintenance season with the fact that around the world, more oil is ending up in storage every day than the day before.”

Meanwhile, in the U.S., the number of active oil rigs saw their largest weekly gain so far this year, pointing to the likelihood of stronger output. Baker Hughes on Friday reported that the U.S. oil-rig count rose by 14 to 371 for the week. “The uptrend in the rig count can be thought as a rebalancing of the rebalancing that may slow the rate of decline in U.S. crude production,” said Tim Evans, an energy analyst at Citi Futures.

Oil prices have been under the $50-a-barrel threshold for weeks thanks to multiple bearish factors. Britain’s decision in June to leave the European Union left market players wondering about the possible contagion effects on regional economic health and oil demand. The ballooning glut of distillates, such as heating oil and diesel, around the world is also weighing on the outlook for crude demand. “[The growth in distillate] was to be expected as many refiners were producing in a full swing while we are coming to the end of the driving season,” said Avtar Sandhu, Asian commodities analysts at Phillip Futures, who believes oil prices could test support at around the $41 level.

Multiple supply disruptions around the world are also coming to an end. In Nigeria, police arrested a key militant responsible for attacks on oil infrastructure, according to an AFP report. Robert Yawger, director of energy futures at Mizuho Securities, cut his WTI price target to $40 from a previous target of $45 on Monday, citing in part U.S. gasoline storage being at its highest seasonal level ever, crude-oil storage holding near a record despite supply declines and recent increases in domestic oil output.

In addition to weekly oil inventories data from the U.S. Energy Department on Wednesday, investors this week will be keeping a close eye on two major central banks — the Bank of Japan and the U.S. Federal Reserve — for their decisions on interest rates and outlooks on their respective countries. The U.S. Federal Open Market Committee will meet July 26-27, followed by the Bank of Japan’s policy meeting July 28-29.