Market Close: June 03 DOWN, Diesel DN $.0808, Gas DN $.0818
Jun 4th, 2024 by loren
Fueling Strategy: Please “PARTIAL FILL ONLY TODAY/TONIGHT” Wednesday prices will DROP 8 Cents ~ Be Safe
NMEX Crude $ 74.22 DN $2.7700
NYMEX ULSD $2.2962 DN $0.0808
NYMEX Gas $2.3356 DN $0.0818
NEWS
NEW YORK, June 3 (Reuters) – Oil prices tumbled by $3 a barrel on Monday to their lowest in nearly four months, as investors worried that a complicated OPEC+ output decision could lead to higher supplies later in the year even though demand growth has been slow. Brent crude futures fell by $2.75, or 3.4%, to settle at $78.36 a barrel, closing below $80 for the first time since Feb. 7. U.S. West Texas Intermediate crude futures also closed at a near four-month low of $74.22 a barrel, down by $2.77 or 3.6% from Friday. Both contracts were down by $3 a barrel in post-settlement trading.
OPEC+ on Sunday agreed ti extend most of its oil output cuts into 2025 but left room for voluntary cuts from eight members to be gradually unwound from October onward. Analysts at Goldman Sachs said the outcome was negative for oil prices as the phasing out of voluntary cuts shows a strong desire by several OPEC+ members to bring back output despite recent increases in global oil stocks. “The communication of a surprisingly detailed default plan to unwind extra cuts makes it harder to maintain low production if the market turns out softer than bullish OPEC expectations,” Goldman Sachs analysts said. Other analysts also called the group’s decision incrementally bearish for oil prices in light of high interest rates and rising output from non-OPEC producers like the United States. “Ultimately, a combination of factors has come into play,” independent oil analyst Gaurav Sharma said, highlighting disappointing economic indicators in the United States and China.
“When OPEC+ took the decision it did over the weekend, in a reasonably well-supplied crude market, traders factored in the macro picture alongside a dwindling risk premium (with talk of a ceasefire in Gaza) and went net short,” Sharma said. An aide to the Israeli prime minister confirmed on Sunday that Israel had accepted a framework deal for winding down the Gaza war, although the Israeli side called it a flawed deal. Signs of weakening demand growth have also weighed on oil prices in recent months, with data on U.S. fuel consumption in focus.
The U.S. government will release estimates of oil stocks and demand on Wednesday, which will show how much gasoline was consumed around the Memorial Day weekend, the start to the U.S. driving season. “The hard numbers are that the market is well-supplied,” said John Kilduff, partner at Again Capital. “If we do not get a spectacular number on Memorial Day in the U.S., that’s going to be game over,” Kilduff added. U.S. gasoline futures fell more than 3% on Monday to a more than three-month low of $2.34 a gallon.
U.S. efforts to replenish the country’s Strategic Petroleum Reserve (SPR) could provide some support for oil prices. The United States is buying another 3 million barrels for the SPR at an average price of $77.69 a barrel, the U.S. Department of Energy said on Monday.
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