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Market Close: Dec 30 Down

Fueling Strategy: Please keep tanks topped tonight, Thursday AM wholesale prices will jump UP 4 cents – Be Safe!

NYMEX Crude $ 36.60 DN $1.2700
NY Harbor ULSD $1.0791 DN $0.0504
NYMEX Gasoline $1.2300 DN $0.0460

NEWS
Oil futures ended sharply lower Wednesday, coming under renewed pressure after Saudi Arabia vowed it would be ready to meet any increase in global oil demand and U.S. crude inventories showed an unexpected rise.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in February dropped $1.27, or 3.4%, to settle at $36.60 a barrel, after trading as low as $36.40 in the immediate wake of Energy Information Data that showed U.S. crude oil stockpiles rose 2.6 million barrels in the week ended Dec. 25. February Brent crude on London’s ICE Futures exchange slid $1.33, or 3.5%, to $36.46 a barrel. Oil had been under pressure even before the data’s release. While analysts surveyed by The Wall Street Journal had forecast a drop in oil inventories of one million barrels, the American Petroleum Institute, a trade group, late Tuesday estimated a 2.9-million-barrel rise. A rise in stockpiles this time of year is particularly troubling for bulls “since inventories normally decrease in late December as holders of oil reduce inventories to reduce taxes for taxes are paid each year based upon inventory levels on Dec. 31,” wrote Bob Shiring, senior energy adviser at Tradition Energy, in a blog post.

Also contributing pressure, Saudi Arabia’s oil minister, Ali al-Naimi, on Wednesday told reporters the country no longer limits oil production and stands ready to meet any rise in demand for crude. “If there is demand, we will respond. We have the capacity to respond to demand,” Naimi said. The overproduction-induced surplus has been a persistent irritant in the oil market for over a year. WTI and Brent prices have plunged more than 70% from their highs in mid-2008 and so far this year, both grades have shed 31% and 36% respectively. Low prices have driven major oil companies to trim investments and cut jobs. Some analysts had expected oil producing countries to rein in production in the wake of crumbling oil revenues but much to their dismay, the Saudi Arabia-led Organization of the Petroleum Exporting Countries earlier this month said it would maintain its “no-cut” strategy to win market share against their non-cartel rivals, such as Russia and the U.S.

Although U.S. crude stocks still stand at levels unseen in eight decades, production has been tapering off in the past few months, offering a glimpse of hope that the oversupply might slowly abate. However, the general forecast for 2016 is that global demand growth will remain far behind supply growth. “This makes it more apparent that OPEC supply is the issue…with sanctions against Iran likely to be lifted in the first quarter, we anticipate new highs in total OPEC production helping to maintain the physical surplus,” said Tim Evans, a Citi Futures analyst in a note.

The EIA also said gasoline inventories rose by 900,000 barrels, slightly above the 800,000 forecast by analysts. Distillate inventories rose by 1.8 million barrels, topping forecasts for a one million barrel rise.

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.