Fueling Strategy: Please keep tanks topped today/tonight, Saturday AM wholesale prices will jump UP 5.5 cents then drop 5 cents Sunday – Be Safe Today!

NYMEX Crude $ 45.88 DN $1.7400
NY Harbor ULSD $1.4304 DN $0.0518
NYMEX Gasoline $1.3611 DN $0.0554

NEWS
Oil futures settled lower on Friday, giving back much of the rally they saw a day earlier on the back of a surprise drop in U.S. crude inventories. But prices still tallied a weekly gain as some traders held on to hope that major producers will make a move this month to curb output. October West Texas Intermediate crude fell $1.74, or 3.7%, to settle at $45.88 a barrel on the New York Mercantile Exchange. Futures saw about a 3.2% weekly gain. The November contract for global crude benchmark Brent lost $1.98, or 4%, to $48.01 a barrel on the ICE Futures exchange in London. It remained up around 2.5% for the week.

The Energy Information Administration on Thursday reported a whopping 14.5 million-barrel drop in U.S. crude stocks for the week ended Sept. 2—the largest weekly withdrawal since the week ended Jan. 1, 1999. The news helped to lift oil prices by over 4% that day, but many observers expect supplies to rebound in coming weeks. While the inventory decline “may seem outrageously bullish, a combination of increased refinery runs and decreased Gulf production due to Hurricane Hermine make this draw an anomaly,” said Daniel Holder, commodity analyst at Schneider Electric, in a note. “The market expects a significant injection as refinery runs slow and the Gulf production returns in force.”

Oil and natural-gas production in the Gulf of Mexico slowed in the run up to the storm with as much as 22% of oil output put on hold. The EIA also said that last week’s oil imports fell by about 1.8 million barrels a day. That “explains much of the collapse in crude-oil stocks,” said Richard Hastings, macro strategist at Seaport Global Securities. “All of that will get ironed out quickly, as tankers will unload cargoes.” If the huge supply decline was indeed just a storm-related event, prices could see a correction next week.

Analysts at London-based Energy Aspects said that an unexpected increase in U.S. crude exports should help temper next week’s expected rise in stock levels. In a note, the think tank said crude exports from the U.S. will average over 400,000 barrels a day in September, with as much as 10 million barrels of crude set to arrive in Europe. Other observers are turning bearish with worries continuing over sluggish global demand growth and increased supply. The situation has led analysts at New York-based Morgan Stanley to admit that conviction levels for the market being rebalanced by mid-2017 are now falling. The bank said in a note that additional unexpected supply from producers such as Iraq, Libya, Nigeria and the U.S. could derail hopes for the market rebalancing.

Data from Baker Hughes revealed that the number of active domestic rigs drilling for oil climbed by 7 to 414 rigs this week. The count, which is a proxy for oil activity, has risen in 10 of the last 11 weeks.

Robert Haworth, senior investment strategist with U.S. Bank Wealth Management, believes oil prices are “likely to remain range-bound.” The market “shifting away from peak demand season as we move into fall,” he said. “Inventories remain high and production declines appear to be insufficient for now to bring supply and demand into balance this year.”

Meanwhile, the Organization of the Petroleum Exporting Countries and Russia are maintaining production-freeze talk ahead of a meeting on the subject in Algeria on the sidelines of the International Energy Forum that’s held on Sept. 26-28.

Saudi Arabia is taking the lead in laying the groundwork for a potential deal,” raising hopes for an output curb, said Naeem Aslam, chief market analyst at ThinkMarkets. “If we see something materializing further on this momentum, we could see the crude price touching the level of $50 ahead of this OPEC meeting.”