Fueling Strategy: Please “FUEL AS NEEDED” today/tonight, Thursday prices will drop less than one penny ~ Please Be Safe!

NMEX Crude      $ 72.56 UP $.1600

NYMEX ULSD     $2.6536 DN $.0070

NYMEX Gas       $2.1354 UP $.0135

NEWS

February WTI crude oil on Wednesday closed up +0.16 (+0.22%), and Feb RBOB gasoline closed up +1.35 (+0.64%). Crude oil and gasoline prices on Wednesday recovered from early losses and settled higher.  Better-than-expected U.S. economic news Wednesday signals strength in the economy that supports energy demand and crude prices.  Also, heightened geopolitical risks in the Middle East are bullish for crude as Houthi rebels continue to attack ships in the Red Sea off Yemen’s coast. Crude prices Wednesday initially moved lower and fell to a 1-week low after the dollar index climbed to a 1-month high.  Also, Wednesday’s selloff in global equity markets sparked a risk-off mood across asset markets.  In addition, weaker-than-expected economic news in China, the world’s second-largest crude consumer, is negative for energy demand and crude prices.

Wednesday’s U.S. economic news was better than expected and supported energy demand and crude prices.  Dec retail sales rose +0.6% m/m, stronger than expectations of +0.4% m/m.  Also, Dec manufacturing production rose +0.1% m/m, stronger than expectations of no change.  In addition, the Jan NAHB housing market index rose +7 to 44, stronger than expectations of 39.  By contrast, Wednesday’s economic news from China was bearish for energy demand and crude prices.  China’s Q4 GDP grew +5.2% y/y, slightly weaker than expectations of +5.3% y/y.  Also, China’s Dec retail sales eased to +7.4% y/y from +10.1% y/y in Nov, weaker than expectations of +8.0% y/y.  In addition, China’s Dec new home prices fell -0.45% m/m, the biggest decline in 8-3/4 years and the seventh consecutive month that home prices have fallen.

The recent series of hostile incidents in the Red Sea against commercial shipping is bullish for oil prices.  Last Friday, the U.S. Navy advised vessels to stay away from the southern Red Sea.  Houthis started attacking ships in the Red Sea in mid-November in support of Hamas in the Israeli-Hamas war and said they won’t stop the attacks until Israel ends its assault on Gaza.  Attacks on commercial shipping in the Red Sea by Iran-backed Houthi rebels have forced shippers to divert shipments around the southern tip of Africa instead of going through the Red Sea, disrupting global crude oil supplies.

An increase in Russian crude oil exports is bearish for crude oil prices.  Tanker-tracking data from Vortexa monitored by Bloomberg shows the four-week average of refined fuel shipments from Russia rose to 2.77 million bpd in the four weeks to Jan 14, up +53,000 bpd from the prior week.

Have a Great Day!

Loren R Bailey, President

Office: 479-846-2761

Cell: 479-790-5581

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