Fueling Strategy: Please “FUEL AS NEEDED” today/tonight ~ Be Safe

NMEX Crude      $ 77.93 DN $.0800

NYMEX ULSD     $2.6518 UP $.0109

NYMEX Gas       $2.5805 UP $.0533

NEWS

April WTI crude oil on Monday closed -0.08 (-0.10%), Apr RBOB gasoline closed up +5.33 (+2.11%). Crude oil prices Monday were undercut by the slightly higher dollar index and weakness in stocks. Also, crude oil saw some bearish carry-over after the president of China National Petroleum Corp’s Economics & Technology Research Institute last Friday said that China’s oil demand has entered a low-growth phase as greater use of electric vehicles and liquified natural gas will replace about 20 MMT or 10-12% of China’s gasoline and diesel consumption this year.

Gasoline prices saw support after Bloomberg reported last Friday that BP’s refinery in Whiting, Indiana may need up to two more weeks to restore normal production after obstacles in the restart process.  The refinery is still having problems after a shutdown on Feb 1 caused by a loss of power.

Crude found support after OPEC+ announced on March 3 that it was extending its current crude production cuts of about 2 million bpd until the end of June.  The group said its crude production cuts will be “returned gradually subject to market conditions” after the second quarter.  However, OPEC Feb crude production rose +110,000 bpd to 26.680 million bpd, a bearish factor for oil prices as Iraq and UAE continue to pump above their production quotas.  Also, Vortexa on March 4 said that OPEC+ compliance with crude production cuts is still “questionable.”  Vortexa said that Russian oil exports were about 500,000 bpd above the OPEC+ commitments, and there are “little indications that Russia is actively cutting either crude production or exports.”  

A recovery in Russian crude refining from Ukranian drone attacks is negative for prices.  Bloomberg calculations show Russia processed 5.44 million bpd of crude during the Feb 15-28 period, more than +4% above levels in the first half of February.  Several Russian oil processing and storage facilities were damaged by Ukrainian drone attacks but have been repaired and are running near capacity.  Tanker-tracking data from Vortexa, monitored by Bloomberg, shows Russian crude exports in the week to March 3 fell about -230,000 bpd from the prior week to 2.78 million bpd, the lowest in five weeks.

Crude prices have underlying support from the Israel-Hamas war and concern that all-out war might spread to Lebanon.  Hezbollah and Israel have traded fire almost daily since the Israel-Hamas war erupted on Oct 7.  Also, the U.S. and UK have engaged in airstrikes against Houthi rebels in Yemen in retaliation for Houthi attacks on commercial shipping in the Red Sea.  Attacks on commercial shipping in the Red Sea by Iran-backed Houthi rebels have forced shippers to divert shipments around the southern tip of Africa instead of going through the Red Sea, disrupting global crude oil supplies.

Have a Great Day!

Loren R Bailey, President

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Cell: 479-790-5581

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