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Market Close: Aug 22 Mixed, Diesel Up 7.57 cents (UP $.5603 since the 1st)

Fueling Strategy: Please fuel as needed today/tonight ~ BE Safe Today
NMEX Crude     $ 90.23 DN $.5400
NYMEX ULSD    $3.7762 UP $.0757
NYMEX Gas      $2.8912 DN $.1263
NEWS
Oil clung to $90 at the conclusion of a volatile session after Saudi Oil Minister Prince Abdulaziz bin Salman warned the disconnect between the futures market and supply fundamentals may force OPEC and its allies to act.

West Texas Intermediate pared more than $4 of losses intraday to settle above $90 a barrel, still finishing cents below the previous session. The Saudi oil chief warned that “extreme” volatility and lack of liquidity in the futures market are moving prices in ways that don’t conform to fundamental supply-and-demand factors. The divergence may prompt the OPEC+ alliance to act, Bloomberg News reported. So far this month, prices have swung within a range of about $13.

Prince Abdulaziz represents the largest oil producer in OPEC+ and is arguably the most important player in the 23-nation alliance. He said futures prices don’t reflect the underlying fundamentals of supply and demand, which may require the group to tighten production when it meets next month to consider output targets. “The Saudis just reminded oil markets that they still run the show,” said Ed Moya, senior market analyst at Oanda. “OPEC+ is not happy with how oil market fundamentals are nowhere being reflected with current prices. It seems energy traders should prepare for enhanced volatility going forward and that the Saudis may look to do whatever it takes to keep prices supported here.”

Prices fell earlier in the session after US President Joe Biden spoke with leaders from France, Germany and the UK about reviving a nuclear deal with Iran, a step that probably would allow more crude shipments by the OPEC nation.

After surging in the first five months of the year, crude’s rally has been thrown into reverse, with losses deepening in the summer trading months. The selloff, which has been intensified by below-average trading volumes, may alleviate some of the inflationary pressures coursing through the global economy that have spurred central banks, including the US Federal Reserve, to hike rates.

Additionally, China was said to be planning a series of special loans to ramp up support for its beleaguered property market, the latest sign of the world’s largest crude importer moving to shore up its economy. The apparent need for such stimulus has exacerbated fears of a global slowdown.

Rising flows of long-haul cargoes into Asia from regions such as the US, which take twice as long as Middle Eastern barrels to reach buyers, have forced spot premiums of Persian Gulf barrels to dip in this month’s trading cycle. Meanwhile options markets have been pricing growing premiums for bearish put contracts that would profit a buyer if prices fall.

Have a Great Day,
Loren R Bailey, President
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As always, thank you so much for being a part of the Fuel Manager Services, Inc. family, and we look forward to making this the best year yet!

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Categories: Fuel News
loren: Fuel Manager Services Inc. "Serving the trucking industry since 1992" I've been in and around the trucking industry for 45-years beginning in owner operator operations at Willis Shaw Express. I bought a small trucking company that I ran for 6-years then sold and went to work for J.B. Hunt Transport in 1982. After 10-years with Hunt, I started Fuel Manager Services, Inc., we are in our 29th year of serving the American trucking companies. Our simple goal was and is to bridge the gap between the trucking companies and the fuel suppliers.