Fueling Strategy: Please fill as needed tonight, Saturday AM wholesale prices will remain flat to down less than 1/2 cent – Be Safe Today!

NYMEX Crude $ 47.87 UP $.4400
NY Harbor ULSD $1.6223 UP $.0013
NYMEX Gasoline $1.6666 UP $.0025

NEWS
Gasoline futures prices eked out a small gain Friday to mark their highest weekly gain in a month, but that represented a hefty retreat from the nearly five-month highs seen earlier in the session. Oil prices, meanwhile, settled higher, paring a loss for the week as Hurricane Harvey, bearing down on the Gulf Coast, threatened to disrupt refinery activity, as well as energy production and demand.

September gasoline rose less than half a cent, or less than 0.2%, to settle at $1.667 a gallon on the New York Mercantile Exchange. Futures prices early Friday had traded at their highest levels since mid-April, tapping a high of $1.741. Instead, they finished at their highest level since July 31. They saw a weekly gain of roughly 2.6%, according to FactSet data. That was their strongest such gain since the week ended July 28. Meanwhile, September heating oil edged up by less than 0.1% to $1.622 a gallon, ending around 0.1% higher on the week. October West Texas Intermediate crude oil added 44 cents, or 0.9%, to finish at $47.87 a barrel, posting relatively modest gains as a hit to refinery production would lead to a potential drop in demand for crude. For the week, WTI still lost 1.6%. October Brent crude on ICE Futures Europe rose 37 cents, or 0.7%, to $52.41, with the contract suffering a weekly loss of 0.6%.

Harvey was expected to become a Category 3 hurricane before it makes landfall on the middle Texas coast, according to an afternoon update from the National Hurricane Center. That would make it the worst weather system to hit the U.S. in almost 12 years. At least 5 refineries have already shut down ahead of the storm, according to Patrick DeHaan, senior petroleum analyst at GasBuddy. “Major flooding [may] be a key issue [and] how long refineries are shut down will have an impact on gasoline prices.” But Thursday afternoon, the storm looked like in may miss some refineries, said Phil Flynn, senior market analyst at Price Futures Group, which caused a pull back in gasoline futures. Flooding may also “kill demand” for gasoline, said Flynn. U.S. crude closed down roughly 2% Thursday on fears that flooding could disrupt refinery operations in parts of Texas, halting crude intake. That could rekindle concerns about overcapacity in the oil market, which would come at a time when U.S. production stands at its highest level since July 2015. “The U.S. is on track to beat previous production records by 2018,” said Nitesh Shah, director and commodities strategist at ETF Securities. More than 45% of the nation’s petroleum refining capacity is located along the Gulf Coast, as well as 51% of U.S. natural-gas processing plant capacity, according to the Energy Information Administration. The Gulf of Mexico region also accounts for 17% of total U.S. crude-oil production and 5% of total domestic dry natural-gas production. As of late Friday morning central time, about 21.6% of total Gulf oil output and about 23.2% of total natural-gas production in the region was shut in, according to the Bureau of Safety and Environmental Enforcement.

There is a perception that this storm has prompted traders to focus mainly on refinery activity, rather than oil and natural-gas production, said Flynn. But “I think that they may be missing to larger point: a slow moving storm that sits over production areas,” which could cause damage to pipelines on the Gulf floor. On Nymex, however, September natural gas shed 5.7 cents, or 1.9%, to $2.892 per million British thermal units, little changed for the week. “Natural gas is down on concerns that power outages will zap demand,” said Flynn. Harvey is the first hurricane to hit the Gulf since the U.S. shale boom got under way over the past decade. Hurricane Ike was the last to hit the region, in 2008, as oil prices were reeling from the global financial crisis. However, in 2005, during Hurricane Rita and Hurricane Katrina, crude prices rose between 4% and 6%.

In other news Friday, Baker Hughes reported that the number of active U.S. rigs drilling for oil fell for a second week in a row, by 4 to 759 rigs this week. Among exchange-trade products Friday, the United States Oil Fund climbed 0.5%, but held on to a loss of 2.1% for the week.

Have a great day,

Loren R. Bailey, President
Fuel Manager Services Inc
“Serving the Trucking Industry Since 1992”