Fueling Strategy: Please partial fill tonight, wholesale prices will drop 1.1 cents Saturday AM – Be Safe Today!
NYMEX Crude $ 49.33 DN $.1500
NY Harbor ULSD $1.4940 DN $.0073
NYMEX Gasoline $1.6319 UP $.0124
NEWS
Oil futures settled lower on Friday, but marked a third-straight weekly gain as traders took a cautious stance ahead of a key meeting of major oil producers next week.
July West Texas Intermediate crude fell by 15 cents, or 0.3%, to settle at $49.33 a barrel on the New York Mercantile Exchange. Prices, based on the most-active contracts, were up roughly 1.9% from last Friday’s settlement, according to FactSet data. July Brent crude declined 27 cents, or 0.5%, to $49.32 a barrel on London’s ICE Futures exchange. The contract, which expires Tuesday, saw a weekly climb of about 1.2%.
WTI and Brent oil breached $50 a barrel on Thursday for the first time this year. Darin Newsom, DTN senior analyst, pointed out the divergence between Brent and WTI crude. Brent’s fundamental factors are increasingly bearish, hinting at no move likely by the Organization of the Petroleum Exporting Countries at next week’s meeting, he said.
WTI, meanwhile, is seeing ”decreasingly bearish fundamentals,” indicating that the recent draw in domestic stocks could continue through next week’s supply report from the U.S. government, said Newsom. Overall, “oil prices have been boosted by a number of factors lately, including the unscheduled production outages, continued output decreases in the U.S. and strong demand for gasoline at the start of the driving season,” said Fawad Razaqzada, technical analyst at Forex.com and City Index.
The Energy Information Administration reported on Wednesday a weekly fall in U.S. production as well as a larger-than-expected decline in crude inventories. “As oil prices continue to rise, however, it will become lucrative for U.S. shale oil companies to ramp up production once again, which could put a ceiling on oil prices,” said Razaqzada. “First to respond will probably be the rig counts, which failed to decrease last week for the first time since mid-March and only the second time this year,” he said. On Friday afternoon, weekly data from Baker Hughes showed that the number of active U.S. rigs drilling for crude fell by 2 to 316 as of Friday. The total U.S. rig count was unchanged at 404. “If the counts begin to stabilize or start to climb, then this should be a warning sign for the ongoing oil-price rally,” Razaqzada said, ahead of the data.
Traders are also looking ahead to Thursday’s meeting of OPEC. Output from members of the group has been climbing and UBS analysts forecast that their production will exceed 33 million barrels a day this summer. “We don’t expect OPEC producers to come to any agreement at the coming meeting in Vienna and expect Gulf countries to ramp up production,” UBS said in a report. “This return of disrupted supply and OPEC’s increasing of production lay the foundation for a wider market surplus, and for prices to fall back below $40 in the short run.”