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Market Close: Feb 06 Up

Fueling Strategy: Please keep tanks topped today/tonight, Friday prices will go UP 6 cents – be Safe Today
NYMEX Crude    $  50.95 UP $.2000
NYMEX ULSD     $1.6654 UP $.0200
NYMEX Gas       $1.4980 UP $0.0117
NEWS
An OPEC+ technical panel has recommended a provisional cut in oil output of 600,000 barrels per day (bpd) in response to the coronavirus’ impact on energy demand as it awaits Russia’s final position on the proposal, three sources said. The Joint Technical Committee (JTC) is not a decision-making body but does advise the Organization of the Petroleum Exporting Countries and allies led by Russia, a grouping known as OPEC+. OPEC and its allies led by Russia produce over 40 percent of global oil and the new proposed cut would constitute around 0.6 percent of global supply.

Brent Crude lost 23 cents, or 0.3%, to trade at $55.05 per barrel, while WTI Crude gained 20 cents, or 0.4%, to settle at $50.95 per barrel. OPEC+ ministers have not decided on further action, but the recommendation on Thursday by all the members of the JTC, which includes Saudi Arabia and Russia, would signal progress towards a decision. “The recommendation is for a cut of 600,000 bpd. Russia has asked for more time for consultations,” one of the sources said. Another OPEC source said the proposed output cut of 600,000 bpd, if agreed by all members, will start immediately and continue until June.  “The 600,000 bpd has taken into consideration the expected return of Libya oil production and all scenarios such as oil demand growth elsewhere,” the second source said, adding that the proposed cut was enough to counter the expected drop in oil demand due to the coronavirus. The OPEC+ ministers have yet to decide on whether to bring forward their upcoming policy meeting to February from March 5-6, the sources said.

The JTC panel extended its meeting into a third day on Thursday after Russia voiced its opposition to a deeper supply cut and was instead suggesting an extension of current cuts. In previous years, Russia has regularly signaled opposition to OPEC before ultimately agreeing on policy during formal meetings. Oil prices have fallen by more than $11 a barrel this year to $55, alarming producers. Saudi Arabia, OPEC’s de facto leader, and other OPEC members are worried that the continued spread of the virus could hit oil demand and prices further, the sources said. Steps that OPEC+ is weighing include further output cuts, extending cuts due to expire in March, and moving forward its planned policy meeting. OPEC sources said the meeting was unlikely to be brought forward unless there was general agreement on the need to reduce output further. OPEC+ is currently cutting output by 1.7 million bpd.

While OPEC countries such as Iraq, OPEC’s second-largest producer, have voiced support for any agreement that would stabilise the market, Russian Energy Minister Alexander Novak said on Tuesday he could not say for sure whether it was time to tighten output further.

The economic slowdown resulting from the virus outbreak is expected to reduce 2020 global demand growth by 300,000-500,000 bpd, or roughly 0.5%, BP Chief Financial Officer Brian Gilvary said on Tuesday.

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.