Fueling Strategy: Please partial fill only tonight, Thursday AM wholesale prices will drop 2 cents – Be Safe Today!
NYMEX Crude $ 38.29 UP $1.7900
NY Harbor ULSD $1.2327 UP $0.0327
NYMEX Gasoline $1.4705 UP $0.0827
NEWS
Oil futures marked another high for the year on Wednesday as a sizable weekly increase in U.S. crude supplies is seen as a reality check that major producers may need to agree to stabilize output later this month.
Gasoline, meanwhile, saw the biggest percentage boost among energy futures after the U.S. inventory report revealed that gasoline supplies fell three times more than expected in the latest week. The report also showed stronger demand for the fuel, which lifts demand prospects for the crude oil used to make it. April West Texas Intermediate crude climbed by $1.79, or 4.9%, to settle at $38.29 a barrel on the New York Mercantile Exchange. That was the highest settlement for a most-active contract since Dec. 4, according to FactSet data. May Brent crude on London’s ICE Futures exchange rose $1.42, or 3.6%, to $41.07 a barrel, also the highest level of the year.
“It is possible that the continued oil supply builds and this week’s stalling production declines in the U.S. are spurring speculation that global producers may be more inclined to freeze or even cut production at the proposed meeting on March 20th,” said Tyler Richey, co-editor of The 7:00’s Report. Members of the Organization of the Petroleum Exporting Countries and non-OPEC producers will meet in Moscow to discuss output, but not all producers have expressed a willingness to revisit their output level. “Those hoping for a legitimate freeze or outright output cuts will unfortunately be disappointed due to the disjointed dynamics of [the Organization of the Petroleum Exporting countries] right now,” Richey said.
The U.S. Energy Information Administration on Wednesday reported a 3.9 million-barrel rise in crude-oil supplies for the week ended March 4. That was less the 4.4 million-barrel increase reported by the American Petroleum Institute, and a little above the rise of 3 million barrels expected by analysts polled by Platts. Total stockpiles climbed to 521.9 million barrels, but crude-oil prices are rallying “despite being at our highest inventory level since August 1930,” said John Macaluso, an analyst at Tyche Capital Advisors.
The EIA showed that total U.S. production stood at 9.078 million barrels a day, edging up by 1,000 barrels from a week earlier. “While fundamentals continue to be quite bearish, production freeze rumors and severe buying pressure have simply scared shorts out of the market,” Macaluso said. “Some resistance should set in following heavy buying pressure towards $40” for WTI.
Meanwhile, gasoline supplies lost 4.5 million barrels according to the EIA—more than the decline of 1.5 million barrels expected by analysts polled by Platts. Distillate stockpiles, which include heating oil, declined 1.1 million barrels last week. The report also showed that over the last four weeks, implied motor gasoline demand rose by 7% from the same time a year ago.
On Nymex, April gasoline jumped by 8.3 cents, or 6%, to $1.471 a gallon and April heating oil added 2.3 cents, or 2.7%, to $1.233 a gallon. Jay Hatfield, president of InfraCap and portfolio manager of their MLP ETF said the gasoline supply drop was fueled by a 28% year-over-year decline in gasoline prices. A forecast for a year-over-year increase in gasoline demand, combined with expectations for a decline in U.S. production of the fuel, “should result in the global oil market being close in balance by the end [of] 2016.”