Fueling Strategy: Please fill as needed tonight, Wednesday wholesale prices will go up 1/2 cents – Be Safe Tonight
NYMEX Crude $ 48.37 UP $.6400
NY Harbor ULSD $1.5167 UP $.0142
NYMEX Gasoline $1.6349 UP $.0160
NEWS
Oil prices settled at a roughly one-week high Tuesday, buoyed by disruptions to Libyan crude production and talk of a six-month extension to an OPEC-led pact to limit global output.
May West Texas Intermediate crude oil the U.S. benchmark rose 64 cents, or 1.3%, to settle at $48.37 a barrel on the New York Mercantile Exchange. That was the highest finish since March 20, according to FactSet data. On the ICE Futures exchange in London, May Brent crude tacked on 58 cents, or 1.1%, to $51.33 a barrel. “Libya oil production is proving to be a lot less reliable, and that makes [an] extension of OPEC production cuts look more bullish,” said Phil Flynn, senior market analyst at Price Futures Group.
Skeptics of the Organization of the Petroleum Exporting Countries’ deal to curb output have argued that the production cuts would be at least partially offset by Libya, which doesn’t have an output quota under the deal. “They thought that Libya production would fill the OPEC void. Yet, it is becoming more clear that the events of recent weeks will make it much harder for Libya to be a reliable supplier and get production back to levels they had” before the fall of dictator Moammar Gadhafi, said Flynn.
An armed group in Libya shut pipelines Monday because of a dispute over wage issues, disrupting production of 250,000 barrels a day. But the news follow reports last week that Libya planned to raise its output to 800,000 barrels a day by April, from current production of 700,000 barrels a day.
Meanwhile, there is a growing sense that OPEC members and its allies must act soon to maintain the credibility of an agreement to curb output that ends in June by extending it until the end of 2017. “Lower oil prices are going to force OPEC into a decision to extend their production cuts for another six months,” speculated Andy Lipow, president of energy consulting firm Lipow Oil Associates. Year to date, WTI crude futures trade down by around 10%.
On Sunday, representatives from Kuwait, Algeria, Venezuela and non-OPEC nations Russia and Oman met in Kuwait to review the current levels of compliance, with no clear commitment to double down on the production-limit pact. Fear of accelerating output by U.S. shale-oil producers has been among the biggest threats to upending the global agreement to limit the free flow of crude oil.
Looking ahead, the energy market will get its weekly update on U.S. petroleum supplies early Wednesday from the Energy Information Administration, after the American Petroleum Institute figures late Tuesday. Analysts polled by S&P Global Platts forecast a rise of 300,000 barrels in crude supplies.