Fueling Strategy: Please keep tanks filled tonight, Wednesday AM wholesale prices will go UP 1.5 cents – Be Safe Today!
NYMEX Crude $ 50.36 UP $.6700
NY Harbor ULSD $1.5415 UP $.0384
NYMEX Gasoline $1.5871 DN $.0016
NEWS
Oil futures settled higher for a second straight session on Tuesday, with continued output disruptions in Nigeria and signs of a pickup in global demand helping to lift U.S. prices to their highest finish since late July. Market participants, however, remained wary of the potential that the recent rise in prices could foster a sudden jump in output.
July West Texas Intermediate crude rose 67 cents, or 1.4%, to settle at $50.36 a barrel on the New York Mercantile Exchange. Prices haven’t settled at a level this high since July 21. August Brent crude on London’s ICE Futures exchange rose 89 cents, or 1.8%, to $51.44 a barrel, with prices logging the highest finish since Oct. 9.
Continued output disruptions in Nigeria, signs of a pickup in global demand, and a U.S. dollar that has weakened in the wake of dovish comments from Federal Reserve Chairwoman Janet Yellen on Monday, are among the main catalysts for crude’s continued climb, said Fawad Razaqzada, technical analyst at Forex.com and City Index. “The main reason for oil’s move is expectations of a tighter market in the second half of the year,” Razaqzada said. He also pointed to a boost in appetite for crude that has been quietly underpinning recent gains. “People are so focused on the supply side that they forget the demand side of the equation [in crude oil],” said Razaqzada.
He estimates that WTI could hit $55 a barrel, while Brent could reach around $56. WTI crude is up more than 90% since hitting a low on Feb. 11, while Brent has gained 70% over the same period. Supply concerns in Nigeria have persisted as a militant group calling itself the Niger Delta Avengers, which has been bombing pipelines in the region, vowed on its purported Twitter account to reduce the country’s production to zero. Commerzbank’s commodities research team estimated that production of Nigeria’s equivalent of Brent crude, “has decreased by 170,000 barrels per day because of the attacks.”
‘Bearish divergence’
But Tim Evans, an energy analyst at Citi Futures and OTC Clearing, said he was concerned “there is more than one form of bearish divergence in evidence—with trading volume light, open interest failing to confirm, and heating oil and gasoline not making new highs of their own.” Naeem Aslam, chief market analyst at ThinkForex, said that his “biggest worry is that as the price improves, the U.S. shale oil business becomes attractive—and this may add more supply on the market.” A monthly report from the Energy Information Administration Tuesday appeared to play down that concern. The agency raised its WTI and Brent price forecasts and left its U.S. output forecasts unchanged for 2016 and 2017. “Low oil prices continue to cut into domestic oil production, with U.S. monthly oil output not expected to start steadily increasing until the end of 2017,” said EIA Administrator Adam Seiminski in a statement.
Looking ahead, the American Petroleum Institute releases its weekly U.S. petroleum inventory data late Tuesday, ahead of Wednesday’s official data from the Energy Information Administration. Analysts polled by S&P Global Platts expect to see a decline of 3.4 million barrels in crude stocks for the week ended June 3. Other factors that could affect U.S. oil and natural-gas prices this week include Tropical Storm Colin in the Gulf of Mexico, which is reportedly picking up speed but hasn’t affected offshore energy infrastructure in the area as yet.