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Market Close: Feb 24 Up

Fueling Strategy: Please partial fill tonight, Thursday AM wholesale prices will drop over 3 cents – Be Safe Today!

NYMEX Crude $ 32.15 UP $.2800
NY Harbor ULSD $1.0594 UP $.0373
NYMEX Gasoline $1.0104 UP $.0441

NEWS

Oil futures settled with a gain on Wednesday, finding support from a weekly decline in U.S. crude production, as strong demand for gasoline pointed to a possible rise in demand for oil to make the fuel. Trading was volatile during the session, as traders also digested news of a weekly climb in U.S. crude supplies, as well as recent comments from major oil producers who dimmed any hopes for production cuts.

April West Texas Intermediate crude tacked on 28 cents, or 0.9%, to settle at $32.15 a barrel on the New York Mercantile Exchange. Prices spent the session whipsawing between a low of $30.56 and high of $32.36. Brent crude on London’s ICE Futures exchange settled up $1.14, or 3.4%, at $34.41 a barrel. “Volatility is king!,” said Phil Flynn, senior market analyst at Price Futures Group. “Oil is trying to balance current record [crude] supply versus signs that demand is rising and supply may [soon] be falling” as the market sees strong demand for petroleum products such as gasoline.

Early Wednesday, the U.S. Energy Information Administration reported a 3.5 million-barrel climb in crude-oil supplies for the week ended Feb. 19. That was below the 7.1 million-barrel increase reported by the American Petroleum Institute on Tuesday, but above the rise of 3 million barrels expected by analysts polled by Platts. “It’s hard for the market to get too excited about inventory levels when recent indications from Iran and Saudi Arabia seem to have cemented the idea that this market will remain oversupplied for the foreseeable future,” Robbie Fraser, commodity analyst at Schneider Electric, told Market Watch. Saudi Arabia’s influential oil minister Ali al-Naimi on Tuesday said “there is no sense in wasting our time seeking production cuts.” In the U.S., however, total production fell by 33,000 to 9.1 million barrels a day last week, the EIA report said. Jay Hatfield, co-founder and president of Infrastructure Capital Advisors, said output has fallen by more than 130,000 barrels a day over the last four weeks and at that rate, the annualized rate of reduction would be at over 1 million barrels a day. And the EIA data also showed that gasoline supplies fell 2.2 million barrels, while distillate stockpiles declined by 1.7 million barrels last week. Over the last four weeks, implied demand for gasoline was up 5.2% from the same time last year.

The EIA report “contained some very strong gasoline demand signals…so the uptick in crude prices might be associated with the impact of rising demand against declining production, which typically pushes prices higher,” said Richard Hastings, macro strategist at Seaport Global Securities. Hatfield, who’s also portfolio manager of the InfraCap MLP ETF said gasoline demand could rise by 7.5% to 10% year over year during the peak driving season. If that happens, the U.S. would have a 500,000 to 750,000 barrel-a-day increase in gasoline demand.

On Nymex, March gasoline tacked on 4.4 cents, or 4.6%, to $1.01 a gallon, while March heating oil added 3.7 cents, or 3.7%, to $1.059 a gallon. March natural gas ended nearly flat at $1.778 per million British thermal units ahead of Thursday’s weekly EIA update on U.S. supplies of the commodity.

Last week, oil prices rallied after Saudi Arabia, and other oil majors reached a tentative pact to cap their future production at the January levels in a bid to support prices. However on Tuesday, Iran’s oil minister called the plan to freeze output “a joke.” Following the comments from Saudi Arabia and Iran, “we feel it is just a matter of time before we break the $30 level to the downside” for WTI oil, said Tariq Zahir, managing member at Tyche Capital Advisors.