Fueling Strategy: Please keep tanks topped tonight, Friday AM wholesale prices will go UP 2 cents – Be Safe Today

NYMEX Crude $ 49.35 UP $.2800
NY Harbor ULSD $1.5453 UP $.0118
NYMEX Gasoline $1.6063 UP $.0036

NEWS
Oil prices settled slightly higher on Thursday, adding to the previous session’s advance on upbeat U.S. inventory data, but the commodity is still expected to face a bumpy ride in coming days ahead of an important OPEC meeting in Vienna to extend production limits.

West Texas Intermediate crude trading on the New York Mercantile Exchange for June delivery — the U.S. benchmark contract finished up 28 cents, or 0.6%, at $49.35 a barrel, after closing at the highest levels in nearly a month on Wednesday. Brent crude the global oil benchmark, picked up 30 cents, or 0.6%, at $52.51 a barrel on London’s ICE Futures exchange. Both contracts had been trading firmly lower earlier in the session.

The U.S. has reported mixed data over the past two days showing the pace of inventory declines has slowed, reigniting fears that shale output will overwhelm efforts to curb a glut of global supply. “Although U.S. commercial stocks are some 34 million barrels below the highest level seen last August, more hard work is needed to bring them down to the five-year average of 1.2 billion barrels,” said Tamas Varga at brokerage PVM. The U.S. Energy Information Administration’s weekly inventory report on Wednesday showed oil inventories were down less than expected, falling 1.8 million barrels. The Wall Street Journal’s survey of 13 analysts had estimated a decrease of 2.2 million barrels. The previous week inventory fell by a steeper 5.2 million barrels. Still, the data also showed the first fall in U.S. production in 13 weeks, which was supportive of prices, Varga said.

U.S. production has been steadily rising since the start of the year, reaching its highest level since August 2015, at 9.31 million barrels a day earlier this month.
Meanwhile, Phil Flynn, senior market analyst at Price Futures Group in Chicago, said upbeat moves in risk assets — specifically the Dow Jones Industrial Average the S&P 500 index and the Nasdaq Composite Index which rebounded from brutal losses on Wednesday — were providing support for assets perceived as risky, like oil. “The stock market is back higher and that’s a good thing for oil,” Flynn said. He said the market is hoping that fiscal-stimulus reforms proposed by President Donald Trump, whose administration has been under siege of late due to allegations of connections to Russia, will finally come and help sop up some oversupply in the market. “We are going to need to see economic reforms [in the U.S.] to get rid of the excess supplies,” Flynn said.

However, analysts and investors were focused on next week’s meeting of the Organization of the Petroleum Exporting Countries and other major producers, including Russia, in Vienna, where the countries are expected to extend production cuts that were agreed to late last year. Some strategists are holding out hope for OPEC to deliver “shock and awe” to the crude market, with many investors already pricing in expectations of an extension of the production limit to March 2018, while others are bracing for the possibility that the cartel will push for deeper cuts from members and nonmembers of OPEC.

“If we do see some kind of increase in production cuts that could get us a little bit above $50 [a barrel],” said Tariq Zahir, managing member of investment-advisory firm Tyche Capital Advisors. Until the meeting, Zahir expects trading to be choppy. So far, OPEC’s efforts to reduce global output by 1.8 million barrels a day has yet to make a notable dent in global supplies. Inventories continue to sit above five-year averages, the level that OPEC wants oil stocks to return to in hopes of boosting prices, which remain less than half of where they were three years ago. Challenges for OPEC may remain even if the production limit is expanded, with expectations that compliance may falter, as countries including Nigeria and Iran may be reluctant to continue to curb their crude output, while U.S. shale oil producers gain market share.

Have a great day,

Loren R. Bailey, President
FUEL MANAGER SERVICES INC
“Serving the Trucking Industry Since 1992”