Fueling Strategy: Please fill as needed tonight, Tuesday partial fill due to Wednesday’s wholesale prices will go down – Be Safe
NYMEX Crude $ 43.87 DN $.4200
NY Harbor ULSD $1.4774 DN $.0122
NYMEX Gasoline $1.3705 UP $.0010
NEWS
Oil futures finished lower Monday to tally a fourth session of losses in a row, as data from China fed concerns about slowing energy demand from the world’s second-largest oil consumer. December West Texas Intermediate crude fell by 42 cents, or 1%, to settle at $43.87 a barrel on the New York Mercantile Exchange. December Brent crude on London’s ICE Futures exchange slipped by 23 cents, or 0.5%, to $47.19 a barrel.
Both WTI and Brent had posted declines over the previous three trading sessions. “The combination of confirmed evidence of global trade weakness, and a huge question mark about global oil demand growth for the first half of 2016, are colliding with the strong [U.S. dollar] to create a nasty suppression of oil prices,” said Richard Hastings, macro strategist at Seaport Global Securities.
The ICE U.S. Dollar Index finished higher last week as a better-than-expected U.S. October employment fed expectations that the Federal Reserve will raise interest rates in December. An increase in interest rates usually doesn’t bode well for oil because it can strengthen the dollar. Moves in the U.S. unit can influence the attractiveness of dollar-denominated commodities to holders of other currencies. WTI crude prices could dip to $41 to $42 on this combination of concerns over global demand growth and a stronger dollar, and Brent would enjoy not more than a $4 premium in this environment, Hastings said. “The bear market continues to evolve in crude oil.”
On Sunday, China’s General Administration of Customs said China’s crude imports in October dropped 5.7% from a month earlier, but rose 9.4% from a year earlier. “China crude-oil imports were strong, but this is partially a bunch of stockpiling on price arbitrage and some tanker cost opportunities,” said Hastings. “The oil-trading market is focusing on the rest of the China trade data, and it is poor,” he said. That suggests that global trade is weak and confirms “the suspicion that…the world trade and production trends are just not supportive to crude-oil demand. The bear market in crude is untouched, unaltered.”
On Monday, Oman’s oil minister called current oil output levels “irresponsible” and blamed the Organization of the Petroleum Exporting Countries for the low oil prices. But Phil Flynn, senior market analyst at Price Futures Group, said he agrees with Saudi Arabia, which said that cut backs by energy companies will get the market back in balance next year. Flynn said the next big move for oil is higher as he expects to see lower U.S. oil production going forward. The EIA’s monthly Drilling Productivity Report released Monday afternoon showed that oil output from the Bakken and Eagle Ford shale plays are expected to fall in November. Production from both shale regions have shown declines each month since March.
Weekly U.S. petroleum supply data from the Energy Information Administration will be released on Thursday morning, a day late because Wednesday is a Federal holiday. The American Petroleum Institute is scheduled to release its weekly supply report on Tuesday afternoon, as usual.
With warmer-than-normal weather expected for the next couple of weeks, there is a chance for storage to see injections continue a week or two later than typical,” said Daniel Holder, commodity analyst at Schneider Electric, in a note.