Market Close: Oct 06 UP, Diesel UP $.0321, Gas UP $.0032
Oct 6th, 2023 by loren
Fueling Strategy: Please “PARTIAL FILL ONLY” today/tonight, Prices are down 18 cents today BUT Saturday diesel will drop another 15 Cents, Sunday prices will go back up 3.5 cents ~ Be Safe
NMEX Crude $ 82.79 UP $.4800
NYMEX ULSD $2.9008 UP $.0321
NYMEX Gas $2.1922 UP $.0032
NEWS
November WTI crude oil on Friday closed up +0.48 (+0.58%), and Nov RBOB gasoline closed up +0.32 (+0.15%). Nov WTI crude oil and gasoline prices Friday posted moderate gains. Bullish factors included a weaker dollar and the outlook for global crude supplies to remain tight. Also, Friday’s mostly stronger-than-expected global economic news supported energy demand and crude prices. A negative factor was concern the Fed will tighten monetary policy further after U.S. Sep nonfarm payrolls rose more than expected.
Global economic news Friday was mostly better than expected and supported energy demand and crude prices. On the bullish side, U.S. Sep nonfarm payrolls surged +336,000, well above expectations of +170,000 and the largest increase in eight months. Also, German Aug factory orders rose +3.9% m/m, stronger than expectations of +1.5% m/m. Conversely, Japan Aug household spending fell -2.5% y/y, a smaller decline than expectations of -3.9% y/y. A supportive factor for crude was Thursday’s action by Saudi Arabia’s state-owned Aramco to raise the price of its Arab light crude to Asian customers for November delivery by 40 cents per bbl, above expectations of 20 cents.
A negative factor for energy prices was Friday’s action by Russia to lift its ban on diesel exports. Russia said diesel exports can resume, provided the fuel is delivered to its ports by pipeline and not seaborne. Late last month, Russia halted gasoline and diesel exports to stabilize domestic fuel prices. The tightness in the oil market is expected to continue due to the extension of OPEC+ production cuts. Saudi Arabia recently said it would maintain its unilateral crude production cut of 1.0 million bpd through December. The move will hold Saudi Arabia’s crude output at about 9 million bpd, the lowest level in three years. Russia also recently announced that it would maintain its 300,000 bpd cut in crude production through December. Saudi Arabia and Russia on Wednesday announced that they will maintain their crude production cuts until the end of the year. OPEC Sep crude production was little changed, rising +50,000 bpd to 27.97 million bpd.
A decline in crude in floating storage is bullish for prices. Monday’s weekly data from Vortexa showed that the amount of crude oil held worldwide on tankers that have been stationary for at least a week fell -11% w/w to 82.52 million bbl as of Sep 29.
The U.S. and Iran announced late last month a prisoner exchange and the unlocking of $6 billion of Iranian funds. Improved U.S.-Iran relations could result in the eventual resumption of nuclear talks, with any deal leading to relaxed Iran sanctions and increased Iranian oil exports. According to TankerTrackers.com, Iranian crude exports rose to a 5-year high of 2.2 million bpd during the first 20 days of August, with most of the crude going to China.
Wednesday’s EIA report showed that (1) U.S. crude oil inventories as of Sep 29 were -4.5% below the seasonal 5-year average, (2) gasoline inventories were +1.1% above the seasonal 5-year average, and (3) distillate inventories were -12.8% below the 5-year seasonal average. U.S. crude oil production in the week ended Sep 29 was unchanged w/w at 12.9 million bpd, the most in 3-1/2 years. U.S. crude oil production is modestly below the Feb-2020 record-high of 13.1 million bpd.
Baker Hughes reported Friday that active U.S. oil rigs in the week ended Oct 6 fell by -5 to a 20-month low of 497 rigs. That is well below the 3-1/4 year high of 627 rigs posted on Dec 2, 2022. Still, U.S. active oil rigs have roughly tripled from the 18-year low of 172 rigs seen in Aug 2020, signaling an increase in U.S. crude oil production capacity from pandemic lows.
Have a Great Day,
Loren R Bailey, President
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