Fueling Strategy: Please fuel as needed today/tonight,Friday prices will remain unchanged but Saturday prices will jump UP 16 cents ~ Be Safe

 

NMEX Crude     $ 89.11 UP $1.8400

NYMEX ULSD    $4.0948 UP $0.1620

NYMEX Gas      $2.7034 UP $0.0731

NEWS

Distillate fuel oil spot futures prices nearly reached resistance at $4.1200 today. A slight increase in refinery production of distillates, and little change to import/export balances during the week were not enough to allay growing concerns for winter ULSD availability. Futures prices rose nearly seventy-five cents, closing very near the weekly high.

Inventories of distillate fuel oil lost 3.4 million barrels during the week. This was only part of a loss of ten million barrels of commercial oil stocks for the week ended September 30, 2022. The losses could become a recipe for real hardship this winter should weather be as demanding as many forecasters have suggested.

There are now fewer than thirty days’ distillate supply in the United States – moving further below the 36.5 days’ supply typical for this time of year. And concerns for the condition of our domestic distribution system add to problems for supply managers.

The situation developing in Europe has become even more unpredictable. Most immediately, more than 60% of France’s refining capacity is down because of strikes over wages. This has pressured prices higher and added to upside price pressure. Imports have risen as well, draining already tight global supplies. Russian losses on the battlefield, ironically in regions of Ukraine formally annexed by Russia, have been at least an embarrassment. This has raised fears that Russia could turn to nuclear weapons, inviting escalation from the EU and the United States. As the weekend began, the bridge that connects Crimea to the mainland sustained major damage, adding to regional chaos.

With all this happening in Europe, the OPEC+ announcement that it would reduce production by two million barrels daily would seem to be almost a footnote to last week’s activity. And perhaps it was.

An ostensible reduction of two million barrels daily supply from OPEC+ will certainly be much less in reality. Many OPEC countries are already struggling to produce to quota. One analyst puts the effective cut at perhaps 750,000 barrels per day. It is, nonetheless, material.

The implications for inflation and, now, probable further Fed rate hikes invites speculation on possible recession. It also casts the long-standing relationship between the United States and Saudi Arabia in a new light. But new light has done little to illuminate the path of global geopolitics going forward.

  Have a Great Day,

 Loren R Bailey, President

Office: 479-846-2761

Cell: 479-790-5581

 

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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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