Fueling Strategy: Please “PARTIAL FILL ONLY” today/tonight due to Thursday prices will fall 5 Cents ~ Be Safe
NMEX Crude $ 85.39 UP $1.6500
NYMEX ULSD $3.0305 DN $0.0144
NYMEX Gas $2.2842 UP $0.0166
NEWS
December WTI crude oil on Wednesday closed up +1.65 (+1.97%), and Dec RBOB gasoline closed up +1.61 (+0.71%). Nov WTI crude oil and gasoline prices on Wednesday shook off early losses and moved higher on speculation that Israel will soon stage a ground assault on Gaza, which could lead to the spread of the conflict in the region that disrupts Middle Eastern crude supplies. Crude and gasoline prices Wednesday initially fell to 1-1/2 week lows on a stronger dollar. Crude prices also moved higher despite a bearish EIA inventory report that showed unexpected increases in crude and gasoline supplies. Crude prices Wednesday recovered from early losses and moved higher after the Wall Street Journal reported that Israel was delaying its ground invasion of Gaza as the U.S. readied air defenses to protect American troops in the Middle East. Also, comments from Israeli Prime Minister Netanyahu boosted crude prices when he said a ground invasion is coming, and he won’t explain the reasons for its timing to avoid providing information to the enemy.
There were hopes for an easing of geopolitical risks from the Israeli-Hamas war after U.S. President Biden and Saudi Crown Prince Mohammed Bin Salman agreed late Tuesday to pursue diplomatic efforts to maintain stability across the Middle East and keep the conflict between Israel and Hamas from spreading. French President Macron visited Egypt on Wednesday and more European leaders visiting Israel.
Weakness in the crude crack spread is bearish for oil prices. The crack spread today fell to a 1-1/2 week low, which discourages refiners from purchasing crude oil and refining it into gasoline or distillates. An increase in Russian crude exports is bearish for oil prices. Tanker-tracking data monitored by Bloomberg shows 3.53 million bpd of crude was shipped from Russian ports in the week ended Oct 22, an increase of 20,000 bpd from the previous week.In a bearish factor for crude oil, the U.S. last Wednesday said it would ease sanctions for six months on Venezuela’s oil exports in exchange for steps to ensure the country holds fair presidential elections next year. An easing of sanctions would put additional crude supplies on the global market, with some analysts estimating about 200,000 bpd of additional supplies.
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 retain 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 63.54 million bbl as of Oct 20, the lowest in 3-1/2 years.
Wednesday’s weekly EIA report was bearish for crude and products. EIA crude inventories unexpectedly rose +1.37 million bbl versus expectations for a -450,000 bbl draw. Also, EIA gasoline supplies unexpectedly rose +156,000 bbl versus expectations of a -1.27 million bbl draw. In addition, crude supplies at Cushing, the delivery point of WTI futures, rose +213,000 bbl. Wednesday’s EIA report showed that (1) U.S. crude oil inventories as of Oct 20 were -4.8% below the seasonal 5-year average, (2) gasoline inventories were +1.1% above the seasonal 5-year average, and (3) distillate inventories were -12.9% below the 5-year seasonal average. U.S. crude oil production in the week ended Oct 20 was unchanged w/w at a record high of 13.2 million bpd.
Baker Hughes reported last Friday that active U.S. oil rigs in the week ended Oct 13 rose by +4 to 501 rigs, recovering slightly from the prior week’s 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.
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