Fueling Strategy: Top all tanks tonight, Saturday AM wholesale prices will go UP 1.5 cents – Be Safe
NYMEX Crude $ 47.84 UP $.0100
NY Harbor ULSD $1.4933 UP $.0034
NYMEX Gasoline $1.5761 UP $.0139
NEWS
Oil prices ended nearly flat on Friday, but notched the first weekly gain in a month on expectations the Organization of the Petroleum Exporting Countries will extend an agreement to curb production when the cartel meets later in the month.
OPEC officials in recent days have suggested the possibility of an extension that would run past the end of the year, as well as deeper production cuts. The Wall Street Journal also reported Friday that some OPEC members hinted at the possibility of bringing new participants, including Turkmenistan and Egypt, into the agreement, helping to temper losses for oil prices.
West Texas Intermediate June crude settled at $47.84 a barrel, up a penny for the session on the New York Mercantile Exchange. It ended roughly 3.5% higher for the week after posting three consecutive weekly declines. July Brent crude on London’s ICE Futures exchange added 7 cents, or 0.1%, to $50.84 a barrel, for a weekly gain of about 3.6%.
The “baseline expectation continues to call for an extension” production cut agreement between members of OPEC and some non-OPEC producers, including Russia, “but the details of any arrangement can have significant price impact,” said Robbie Fraser, commodity analyst at Schneider Electric. A monthly OPEC report released Thursday showed that cartel members were sticking to the production quotas. In April, OPEC’s total output dropped again to an average of 31.73 million barrels a day. This means the cartel’s production has fallen by more than the 1.2 million barrels a day that it had pledged in November.
OPEC also raised its forecast for oil-production growth from countries outside of OPEC by more than 60%. That could, however, create pressure for OPEC to extend or even deepen its curbs when members meet on May 25, brokers and analysts said. “The odds of a larger and longer cut now outweigh the odds of nothing, no cut at all. That’s a difference,” said Scott Shelton, a broker at ICAP PLC. Still, prices won’t likely rebound quickly because of accelerating production from countries like U.S., Brazil, Canada, and even OPEC members Nigeria and Libya. OPEC will also be mindful that U.S. producers will likely expand output and take more market share away from the cartel the longer it curbs production, said Tom Pugh, a commodities economist at Capital Economics. “As such, it is likely to extend its production cuts by the minimum amount of time necessary to bring stocks down to more normal levels,” he noted.
On Friday, Baker Hughes reported that the number of active U.S. rigs drilling for oil climbed by 9 to 712 rigs this week. The oil-rig count has climbed every week so far this year, except for one—and this marked the 17th straight weekly rise.
Have a great day,
Loren R. Bailey, President
FUEL MANAGER SERVICES INC
“Serving the Trucking Industry Since 1992”