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The obvious market moving story is the impact on world fuel markets of the Hamas – Israeli conflict that appears to be growing more intense by the day. As traders are trying to digest what could turn into a regional mess, expect wild swings for the short term.
Coming off the Monday Holiday, prices surged higher Tuesday as OPEC+ heavyweights Russia and Saudi Arabia confirmed they would extend voluntary production cuts through the end of the year. Fueling the rise from the Cpt. Obvious department, big banks publish reports to expect $107 Crude if cuts maintain. Buy the rumor, sell the fact. Diesel had a nice sell off going, but remember, one day doesn’t reverse the trend. Wednesdays intraday action erased almost all of the gains only to settle down slightly. While we still sit almost $1 higher in pricing than the beginning of the Summer, you would have to think better days are to come. Current JUNE 24 Diesel future pricing is $.45 less than front month October 23.
There is no sauce that can make crow taste good. I’ve been holding to the mindset that Diesel futures market should correct to the mid $2.30s for about a month now. We have risen over $.50 in that time with every day for the last two weeks being up. Well, I am going on “the bound to win” theory and sticking with it!
It appears that the Canadian Wildfires have spread a cloudy haze not just over the Northeast but also over the collective minds in the Fuel Markets. The last few days produced data that simply put, has baffled market sentiment. First to note, Diesel prices are roughly $2 LESS per gallon today versus a year ago. Thus, one would assume production and inventories to fall. This week’s Inventory report showed production is UP 2% and Inventories are UP 2.5%, yet future pricing is about $.20 HIGHER than a week ago. Again, usually higher stocks trigger lower production and falling prices.
WTI jumped over 5% late this morning, as news broke that OPEC+ members would be agreeing not to raise production levels in April. According to reports, the current established levels for each of the member countries will be continuing as is through April and May, and the Saudi's are planning to forge ahead with continuing to keep the additional 1 million barrels per day offline as agreed to for February and March.
Despite today's across the board drops on refined prices, (-.0262 UL & -.0255 RBOB) this week saw oil prices overall continue to tick upward.
Oil markets were tumbling well before the open today, and unfortunately we didn't see that turn around at all through the course of the official trading day.
Saturday, ten unmanned drones struck a major Saudi Aramco facility in Saudi Arabia, and immediately took 5.7 million barrels out of the global supply. The Abqaiq plant that was impacted is one of the world's largest processors.
Prices surged this morning after a slow down on Friday, on news from the G20 Summit that Russia and Saudi Arabia have agreed to extend the OPEC+ production cuts by another 6-9 months. The agreement still needs to be ratified at the upcoming OPEC meeting, but that is essentially a formality at this point, given Russia & the Saudi's are in agreement.
The NYMEX was up today across the board, with Crude closing out at $63.08/bbl, comfortably above that $60 benchmark, and refined products both edged up almost 3 cents, with ULSD closing at 2.0424 (+.0290) and RBOB settling at 1.9687 (+.0288).