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Market Close: Down, “Crude Prices Drop Below Pre-Saudi Drone Attack”

Fueling Strategy: Please fuel as needed today/tonight, no change in fuel prices tonight BUT plan on Wednesday’s 4 cent drop in prices – Be Safe
NYMEX Crude    $ 54.07 DN $1.8400
NYMEX ULSD     $1.9056 DN $0.0360
NYMEX Gas       $1.6065 DN $0.0465
NEWS
Oil fell on Monday as China’s economic outlook remained weak amid an ongoing trade war with the United States and market fears of supply shortfalls and conflicts in the Middle East after the Sept. 14 attack on Saudi Arabia faded. Brent crude futures were down $1.16, or 1.9%, at $60.75 a barrel. U.S. West Texas Intermediate (WTI) crude futures fell $1.84, or 3.3%, to settle at $54.07. Both benchmarks were on track for little price changes in September after volatile month where prices spike nearly 20% after the attacks halved Saudi Arabia’s output, but have pared nearly all those gains as output has been quickly restored. For the quarter, however, global benchmark Brent was set for a 8.6% loss, while WTI was down about 6.1%, as concerns that the trade war between the United States and China has plunged global economic growth to its lowest levels in a decade weighed on oil demand growth.

China’s official Purchasing Managers’ Index (PMI) was slightly improved this month, increasing from 49.5 in August to 49.8 in September, but remained below the 50-point mark that separates expansion from contraction on a monthly basis, data from the National Bureau of Statistics showed. China, the world’s largest crude importer, warned of instability in international markets from any “decoupling” of China and the United States, after sources said U.S. President Donald Trump’s administration was considering delisting Chinese companies from U.S. stock exchanges. “The U.S. and China are still far from any type of agreement. The concern is oil demand is not going to be there,” said Kyle Cooper, an oil analyst at IAF Advisors.

Saudi Aramco last week restored full capacity to the level before the attacks on its oil facilities, Ibrahim Al-Buainain, chief executive officer of its trading arm, said on Monday at a conference in the United Arab Emirates. The world’s top oil exporter Saudi Arabia has restored capacity to 11.3 million barrels per day (bpd) after the attack knocked out 5.7 million bpd of the kingdom’s output, sources told Reuters last week, though Saudi Aramco has yet to confirm its operations have been restored fully. The “much quicker than expected return of Saudi oil (supply) as we go into refinery maintenance season” was weighing on prices, said Andy Lipow, president of Lipow Oil Associates in Houston.

Market fears of broader escalating tensions in the Middle East after Saudi Arabia and the United States blamed the attacks on Iran, have also faded somewhat, easing upward pressure on prices, analysts said. Saudi Arabia’s Crown Prince Mohammed bin Salman, often referred to as MBS, said in an interview broadcast on Sunday he would prefer a political solution to a military one in response to attacks. But he warned oil prices could spike to “unimaginably high numbers” if the world does not come together to deter Iran. Money managers cut their net long U.S. crude futures and options positions in the week to Sept. 24, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday. “As long as peace breaks out in the Middle East, we’ll see oil continue to trade lower,” said Robert Yawger, director of energy futures in New York.

Oil prices are likely to remain steady this year, a Reuters survey showed, with supply shocks such as the attack on Saudi Arabia countering flagging demand. Analysts forecast that Brent crude would average $65.19 a barrel in 2019 and WTI $57.96.

Have a Great Day,
Loren R Bailey, President
Fuel Manager Services Inc.
Office: 479-846-2761
Cell: 479-790-5581
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.