Fueling Strategy: Please keep tanks filled tonight, re-top all tanks before 23:00 CST, Thursday AM wholesale prices will go up 1.2 cents – Be Safe Today!

NYMEX Crude $ 49.56 UP $.9400
NY Harbor ULSD $1.5127 UP $.0240
NYMEX Gasoline $1.6416 DN $.0128

NEWS
Oil futures settled on Wednesday at their highest level since early October after a U.S. government report revealed a greater-than-expected fall in domestic crude supplies.

Prices, however, stayed below the key $50-a-barrel level as a surprise climb in gasoline stockpiles sent futures prices for crude-product lower. July West Texas Intermediate crude tacked on 94 cents, or 1.9%, to settle at $49.56 a barrel on the New York Mercantile Exchange — the highest since Oct. 9. July Brent crude rose $1.13, or 2.3%, to $49.74 a barrel on London’s ICE Futures exchange.

The Energy Information Administration early Wednesday reported that U.S. crude supplies fell 4.2 million barrels to total 537.1 million barrels for the week ended May 20. The American Petroleum Institute late Tuesday had reported a 5.1 million-barrel fall, while analysts polled by S&P Global Platts expected a 3.3 million-barrel decline. “Taken alone, it’s a pretty decent, fairly seasonally typical set of stats,” said Anthony Starkey, manager of energy analysis at Platts Analytics, a unit of S&P Global Platts. Supply “builds have turned into draws. However, given where inventories stand, in order to get really excited, we need to see some outsized draws, which have yet to materialize.” Gasoline supplies climbed unexpectedly, by 2 million barrels, while distillate stockpiles, which include heating oil, fell 1.3 million barrels last week, according to the EIA.

“It appears refineries may have overcompensated a bit on gasoline production in lieu of distillate production,” said Starkey. James Williams, energy economist at WTRG Economics, said Wednesday’s report showed U.S. crude imports from Canada were actually up 500,000 barrels a day at 3.088 million barrels a day. That’s “about the same as the March and April average,” he said. The rise in imports comes despite reported Canadian production cuts of around 1 million barrels a day in recent weeks due to wildfires. Williams suggested that the rise may have come from the return of some output as well as oil in storage.

The EIA report Wednesday also showed that domestic oil production in the lower 48 states fell by 20,000 barrels a day to 8.265 million barrels a day.

“The production number was actually disappointing for the bulls as U.S. output in the lower 48 (the less volatile figure as it removes the Alaskan data) fell -20K [barrels a day] last week, which is nearly half the pace of the 4-week average of -38.75K b/d,” said Tyler Richey, co-editor of The 7:00’s Report. Recent supply disruptions in Canada, Nigeria and Libya have been helping to support prices, which have climbed more than 30% year to date.

“There’s no question that supply problems in Canada and Nigeria have helped bolster prices, but the improving fundamentals suggest we might be close to a sustainable price, especially if Nigerian production losses persist for a couple of months,” said Michael Lynch, president of president of Strategic Energy & Economic Research. “That, plus signs of record high summer gasoline demand, has definitely shifted the market psychology,” he said. “But persistently high inventories should prevent prices going much over $50—I think.”

Many expect the global supply glut to continue amid increased production from members of the Organization of the Petroleum Exporting Countries, including Iran. Members of the group are scheduled to meet on June 2.