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Market Close: May 11 Up

Fueling Strategy: Please keep tanks topped tonight – this will be the strategy until we see positive announcements concerning the Colonial Pipeline – If you’re heading towards the the Colonial service area PLEASE go in completely full of fuel – Be Safe
NYMEX Crude    $  65.28 UP $.4900
NYMEX ULSD     $2.0417 UP $.0251
NYMEX Gas       $2.1399 UP $.0065
NEWS
Oil prices rose on Tuesday, as lingering fears of gasoline shortages due to the outage at the largest U.S. fuel pipeline system after a cyber attack brought futures back from an early drop of more than 1%. Brent Crude rose 35 cents, or 0.5%, to $68.67 a barrel. US West Texas Intermediate crude rose 49 cents, or 0.8%, to $65.41.

On Monday, Colonial Pipeline, which transports more than 2.5 million barrels per day (bpd) of gasoline, diesel and jet fuel, said it was working to restore much of its operations by the end of the week. “Right now there’s a generalized anxiety premium being built into prices because of Colonial and it’s keeping a floor under the market,” said John Kilduff, partner at Again Capital LLC in New York. Fuel supply disruption has driven gasoline prices at the pump to multi-year highs and demand has spiked in some areas served by the pipeline as motorists fill their tanks. Traders booked at least four tankers to store refined oil products off the U.S. Gulf Coast refining hub after a cyber attack that knocked out the pipeline, shipping data showed on Tuesday.

North Carolina, the U.S. Environmental Protection Agency and Department of Transportation issued waivers allowing fuel distributors and truck drivers to take steps to try to prevent gasoline shortages. OPEC on Tuesday raised its forecast for demand for its crude by 200,000 bpd and stuck to its prediction of a strong recovery in global oil demand this year as growth in China and the United States counters the coronavirus crisis in India. Meanwhile, the rapid spread of infections in India has increased calls to lock down the world’s second-most populous country and the third-largest oil importer and consumer. India’s top state oil refiners have already started reducing runs and crude imports as the new coronavirus cuts fuel consumption, company officials told Reuters on Tuesday.

On the bullish side for crude, analysts are expecting data to show U.S. inventories fell by about 2.3 million barrels in the week to May 7 after a drop of 8 million barrels the previous week, a Reuters poll showed. Gasoline stocks are expected to have fallen by about 400,000 barrels, analysts estimated ahead of reports from the American Petroleum Institute on Tuesday and the U.S. Energy Information Administration on Wednesday.

Have a Great Day,
Loren R Bailey, President
Fuel Manager Services Inc.
“Serving the trucking industry since 1992”
Office: 479-846-2761
Cell: 479-790-5581
 
“To give real service you must add something which cannot be bought or measured with money, and that is sincerity and integrity.” 
Fueling Strategy: Until the Colonial Pipeline incident is resolved please keep your tanks topped – The next couple of days will provide us with more information going forward. What we want to hear is primary & secondary rack cities are being restarted – Be Safe Tonight
NYMEX Crude    $ 64.92 UP $.0200
NYMEX ULSD     $2.0166 UP $.0044
NYMEX Gas       $2.1334 UP $.0065
NEWS
Colonial Pipeline said Monday afternoon that parts of its system are being brought back online, and it hopes to restore service by the end of the week. “Segments of our pipeline are being brought back online in a step wise fashion, in compliance with relevant federal regulations and in close consultation with the Department of Energy, which is leading and coordinating the Federal Government’s response,” the company said in a statement. The company said the situation “remains fluid and continues to evolve,” and that it’s following an incremental process that will return sections to service based on a phased approach. “This plan is based on a number of factors with safety and compliance driving our operational decisions, and the goal of substantially restoring operational service by the end of the week,” the company said.

Gasoline futures were slightly higher early Monday afternoon on Wall Street, after spiking to their highest level in around three years during overnight trading. “The initial price movement was a knee-jerk reaction, expecting severe or prolonged impacts to gasoline, and heating oil and other product supply,” said Darwei Kung, head of commodities at DWS Group. “I think people are looking at the situation right now, and understanding that the disruption probably is not nearly as severe as the initial knee-jerk reaction would imply.”

Colonial Pipeline, which operates the largest fuel transmission line from the Gulf Coast to the Northeast, “halted all pipeline operations” on Friday night as a proactive measure following a ransomware cyberattack. A criminal group criminal group known as DarkSide was responsible for the attack, the FBI confirmed. The company said Sunday evening that some of its smaller lateral lines between terminals were once again online, but that its main lines were still shut down.

The pipeline is a critical part of U.S. petroleum infrastructure, transporting around 2.5 million barrels per day of gasoline, diesel fuel, heating oil and jet fuel. The pipeline encompasses more than 5,500 miles and carries nearly half of the East Coast’s fuel supply. The system also provides fuel for airports, including in Atlanta and Baltimore.

Colonial Pipeline Update

We’re hearing some positive news meaning the truck  stops have adequate supplies for now. I believe we’ll have a better analysis by Friday on the start up and operation of the pipeline. So please keep your tanks topped when heading towards the Colonial Pipeline service areas.

 

To our Valued Customers:

The cyber-attack on the Colonial Pipeline did not affect Pilot Company’s systems. Our team is closely tracking impacts from the outage on the market and working hard to ensure that product remains available.

We have invested significantly in our supply chain infrastructure and while the Colonial Pipeline provides some of our fuel, we currently have sufficient inventory to supply our stores and your fleet.

We are actively monitoring the situation and will keep you informed on any changes to supply availability at our travel centers.

Store Operations & Supply Conditions:  

  • All locations are open and fueling.

Please reach out to your sales representative with any questions. We appreciate the opportunity to serve you.

Sincerely,

David Hughes
Senior Vice President of Sales

Strategy: If your within the fuel service area of the Colonial pipeline today,  please make sure your full of fuel or in position to top out as soon as possible.

Do NOT be surprised if truck stops place maximum gallons ie 50 gallons during this shut down of the Colonial Pipeline.

If your dispatched towards the Colonial service it’s very important to be “full of fuel” heading in to assure you have enough fuel to get out. The next couple of days will tell us the severity of the hack. Questions, feel free to call me, Loren, at 479-790-5581

 

Overview

  • Ransomware attack on Colonial Pipeline- all pump stations offline
  • DarkSide – Ransomware for hire company believed to be responsible for attack
  • FireEye – Cybersecurity company believed to be responding
  • Manual override seems unlikely, heavily dependent on digitized systems
  • If not back in 2-3 days, 1 week+ of downtime expected as backups would assumed to be compromised, as well

Supply

  • Current Outages/Shutdowns reported
    • All Colonial Pipeline terminals are down
      • Chattanooga
      • Fredericksburg
      • Charlotte
    • Bainbridge MO – no products

DSL:

  • Expect contracts to be cut, mostly relying on Pilot Company Inventory, our assets and own tanker fleet
  • Daily allocation contracts prioritization, “use it or lose it”
  • Charlotte and Nashville are focus markets
  • Focus on ability to supply from port cities

Logistics/Transportation

  • Inventories look good at this time with no outage concerns
  • Focus Markets – Nashville and Charlotte are areas of concern after 2-3 days
  • Added tanker fleet drivers this weekend in Nashville/Charlotte markets
  • Adding tanker floaters in Nashville and Charlotte markets

Market Close: May 07 Up

Fueling Strategy: Please partial fill ONLY today, Saturday prices will drop 1.5 cents then Sunday prices will continue UP 2 cents – Be Safe  
NYMEX Crude    $ 64.90 UP $.1900
NYMEX ULSD     $2.0106 UP $.0211
NYMEX Gas       $2.1269 UP $.0132
NEWS
There was a slight pullback in oil prices following Wednesday’s highs, but the rally is still very much on and bullish sentiment is palpable as summer driving season nears.
Brent tested $70 per barrel on Wednesday but fell back on Thursday. Oil “had a great run, but it got a little bit ahead of itself,” Phil Streible, chief market strategist at Blue Line Futures LLC in Chicago, told Bloomberg.  “We’ve hit resistance and prices pulled back,” but it’s hard to see a summer demand boost “being derailed,” he said. Oil is still set to close out the week with another gain.
Have a Great Day,
Loren R Bailey, President
Fuel Manager Services Inc.
“Serving the trucking industry since 1992”
Office: 479-846-2761
Cell: 479-790-5581
 
“To give real service you must add something which cannot be bought or measured with money, and that is sincerity and integrity.”

Market Close: May 06 Down

Fueling Strategy: Please fuel as needed today/tonight, Friday prices will go UP less than 1/2 cents please partial fill only due to Saturday prices will drop 1.5 cents – Be Safe Today
NYMEX Crude    $ 64.71 DN $.9200
NYMEX ULSD     $1.9895 DN $.0130
NYMEX Gas       $2.1137 DN $.0376
NEWS

A shortage of tanker truck drivers in the United States made headlines recently, sparking fears that Americans may face higher prices at the pump this driving season, just as travel—and gasoline demand—begins to really recover. Yet not all agree there are good reasons for this fear.

In an article for Forbes, Suzanne Rowan Kelleher noted several experts’ opinions that were on the calm side. According to these experts, the tanker truck driver shortage was a temporary problem, not a dramatic event that would send prices at the pump soaring. The American Automobile Association said in a statement that while it expected a bigger jump in gas prices this month, the tanker truck driver shortage would not lead to higher summer season prices. “Last week, media reports surfaced that a shortage of fuel tank truck drivers may impact gasoline availability this summer,” spokeswoman Jeanette McGee said. “As gasoline demand increases, gas stations are working to adjust delivery schedules to keep pace. However, deliveries may be delayed in a small number of markets this summer causing select stations to see low to no fuel at some pumps for short periods, one or two days.”

According to the National Tank Truck Carriers, however, as much as 20-25 percent of its fleet was parked because of a shortage of qualified drivers. This, according to CNN, is more than double the level of idled tanker trucks this time in 2019. “We’ve been dealing with a driver shortage for a while, but the pandemic took that issue and metastasized it,” the executive vice president of the NTTC, Ryan Streblow, said. “It certainly has grown exponentially.”

Another industry insider said, as quoted by CNN, that some tanker truck drivers had taken last year’s collapse in fuel demand—and the resulting loss of work—as a hint to take early retirement. The workforce in the tanker truck driving business is aging, and schools where new tanker truck drivers are trained were closed early in the pandemic, cutting off new supply. So, while energy experts are brushing off the shortage of drivers, the driving industry itself appears to be a bit more concerned about the situation. And it’s not just driver shortage that will be affecting prices this summer. The cold spell that froze Texas in February brought a lot of refining capacity offline, and not all of it has fully recovered to normal production rates. The Texas Freeze shut down as much as 6 million bpd in refining capacity on the Gulf Coast, which made up a third of the national total.

These two factors, coupled with the expected surge in demand as vaccinated Americans take to the roads in droves, have caused some market observers to expect substantially higher prices this summer. However, some expect drivers will have no problem absorbing the additional bill.

“If we get to that herd immunity, I don’t think $3.50 for gasoline is going to stop anyone,” John LaForge, head of Wells Fargo’s Real Asset Strategy division, told Reuters at the end of April. “That’s why you can probably see higher prices into the summer, because for the last year, a lot of people have not been driving… and people want to get out, so they’ll absorb it.” “If people look at what they were paying for gasoline last year, it was extraordinarily cheap,” U.S. energy policy expert Jay Hakes told Forbes’ Rowan Kelleher, “because we had the biggest drop off in oil demand—probably in history, certainly in modern history—where all of a sudden, within a week or two, people weren’t flying and they weren’t driving.”

So, prices at the pump will likely jump during the summer, which is not so extraordinary as they tend to do that every driving season. Even if the jump is higher than usual, it is unlikely to discourage travel after a year of lockdowns.

Have a Great Day,
Loren R Bailey, President
Fuel Manager Services Inc.
“Serving the trucking industry since 1992”
Office: 479-846-2761
Cell: 479-790-5581
 
“To give real service you must add something which cannot be bought or measured with money, and that is sincerity and integrity.” 
Fueling Strategy: Please keep tanks topped tonight, Thursday prices will jump UP 5 cents – Be Safe
NYMEX Crude    $ 65.63 DN $.0600
NYMEX ULSD     $2.0025 UP $.0037
NYMEX Gas       $2.1513 UP $.0001
NEWS

Oil was little changed, giving up earlier gains as traders assessed an increase in gasoline stockpiles and technical signals suggesting the commodity’s rally was due for a pullback.

Futures in London pared a gain of as much as 1.6% after testing a run to the key psychological $70-a-barrel mark. While an Energy Information Administration report on Wednesday showed U.S. crude stockpiles fell by nearly 8 million barrels last week and exports surged by the most on record, gasoline inventories rose for a fifth straight week. Crude has advanced alongside a broader rally across raw materials that’s driven the Bloomberg Commodity Spot Index to the highest in almost a decade. The earlier oil rally failed to break through key resistance levels, and prices flirting with the upper Bollinger band in recent sessions added to bearish pressures. The longer-term demand recovery continues to be underpinned in the U.S. by the rollout of Covid vaccines as the country reopens. Oil “had a great run, but it got a little bit ahead of itself,” said Phil Streible, chief market strategist at Blue Line Futures LLC in Chicago. “We’ve hit resistance and prices pulled back,” but it’s hard to see a summer demand boost “being derailed,” he said.

Beyond headline prices, the closely watched spread between U.S. benchmark crude’s two nearest December contracts has widened its bullish backwardation structure this week, reflecting expectations for an improving supply and demand dynamic. The crude draw “is indicating that not only is the U.S. economy reopening, but given the export number, international markets are opening back up as well,” said Brian Kessens, a portfolio manager at Tortoise, a firm that manages roughly $8 billion in energy-related assets. “It seems like, at least in the developed world, we’re seeing pretty constructive reopening” progress.

While the U.S. and Europe are charting a course for reopening, the Covid-19 crisis in India may yet worsen. Saudi Arabia has lowered its prices for Asian customers as case numbers in the key crude importer crimp energy demand. Consultant Facts Global Energy now expects India’s oil-product demand to drop 670,000 barrels a day in May from March levels, larger than previously forecast.

Refinery utilization in the U.S. climbed back above its 5-year average more than a year after the pandemic devastated oil consumption, though that includes year-ago levels that factor in the more immediate aftermath of the coronavirus fallout. Pent-up travel demand in the country is seen spurring a 30% jump in jet fuel use this summer — one of the worst-hit parts of the barrel as international travel remains anemic.

Investors are betting that rising vaccine-aided demand and greater mobility in key economies will drain crude stockpiles and support higher prices.

Have a Great Day,
Loren R Bailey, President
Fuel Manager Services Inc.
“Serving the trucking industry since 1992”
Office: 479-846-2761
Cell: 479-790-5581
 
“To give real service you must add something which cannot be bought or measured with money, and that is sincerity and integrity.” 

Market Close: May 04 Up

Fueling StrategyPlease keep tanks topped tonight due to Wednesday prices will go UP 3 cents then Thursday prices will go UP another 5 cents – Be Safe! 
NYMEX Crude    $ 65.69 UP $1.2000
NYMEX ULSD     $1.9988 UP $0.0469
NYMEX Gas       $2.1512 UP $0.0497
NEWS
Commodities jumped to their highest in almost a decade as a rebound in the world’s largest economies stokes demand for metals, food and energy, while poor weather harms crops and transportation bottlenecks curb supplies.
With some major economies emerging from the pandemic, metals are rising as manufacturing picks up, and the return of motorists to the roads is boosting energy prices. Meanwhile, crops like corn, wheat and sugar have surged as dryness hurts plants in Brazil, the U.S. and Europe, while China gobbles up supplies. Hedge funds have been raising their bullish wagers on commodities, signaling a renewed inflationary bet.
“There’s definitely optimism for an improving economic outlook to lead to acceleration of demand,” Greg Sharenow, a portfolio manager at Pacific Investment Management Co., said in an interview. The futures curves for several commodities are pointing to tight supplies, he added.
The U.S. and China are recovering fast from the pandemic, stoking demand for more cars, electronics and infrastructure. Ford Motor Co. expects a $2.5 billion impact from commodity costs in the last three quarters of the year, coming from steel, aluminum and precious metals.
President Joe Biden’s $2.25 trillion infrastructure package and bets that more aggressive climate pledges will accelerate the proliferation of solar panels, wind turbines and electric vehicles are also driving gains and raising fears about a metal shortages.
Commodities may jump another 13.5% in six months, with oil reaching $80 a barrel and copper reaching $11,000 a ton, Goldman Sachs Group Inc. said April 28 in a report. Crude is expected to see the biggest-ever increase in demand over the next six months as the vaccination rollout boosts mobility, according to Goldman.
But while commodities are hot, it’s not necessarily the start of another supercycle — an extended period during which prices are well above their long-term trend. The magnitude of demand growth over the next years shouldn’t be the same as when China’s rapid industrialization drove the last supercycle in the first decade of the century, and ample spare capacity should keep a lid on energy prices, Oxford Economic’s Stephen Hare said in a report in April.
The world will begin to rotate into services from goods as workers go back to offices, reducing demand for metals to make home electronics and kitchen appliances, according to analysts at JPMorgan Chase & Co. Iron-ore, which recently touched a record, could pull back about 20% from current levels by year-end, and copper, which last month topped $10,000 a metric ton, will drop to about $8,250 in the fourth quarter, according to Capital Economics.
Commodity price swings have a significant impact on the cost of living since they can encompass the price of fuels, power, food and construction projects. They also help shape terms of trade, exchange rates and ultimately the politics of commodity-dependent nations like Russia, Brazil and Chile.

“The surge in commodity prices over the past year now guarantees higher goods price inflation this summer,” IHS Markit Ltd. said in a report on April 29. “During the next few months, even top-line consumer price inflation in countries such as the United States will rise to rates not seen in nearly ten years.”

Have a Great Day,
Loren R Bailey, President
Fuel Manager Services Inc.
“Serving the trucking industry since 1992”
Office: 479-846-2761
Cell: 479-790-5581
 
“To give real service you must add something which cannot be bought or measured with money, and that is sincerity and integrity.” 

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