Market Close: July 07 UP, Diesel UP $.0797, Gas UP $.0455
Jul 7th, 2023 by loren
Fueling Strategy: Please fuel as needed today/tonight but plan on Saturday’s price drop of 1.5 cents~Be Safe
NMEX Crude $ 73.86 UP $2.0600
NYMEX ULSD $2.5591 UP $0.0797
NYMEX Gas $2.5893 UP $0.0455
NEWS
August WTI crude oil on Friday closed up +2.06 (+2.87%), and Aug RBOB gasoline closed up +4.55 (+1.79%).
Crude oil and gasoline prices Friday settled moderately higher, with crude climbing to a 1-month high. A fall in the dollar index Friday to a 2-week low supported gains in energy prices. Crude also has carryover support from this week’s action by Saudi Arabia and Russia to extend their voluntary crude production cuts. Crude prices raced to their highs Friday afternoon after the weekly report from Baker Hughes showed active U.S. oil rigs fell to a 15-month low.
Strength in the crude crack spread supports crude prices after the crack spread Friday rose to a 2-1/2 week high. The higher crack spread encourages refiners to boost their crude purchases and refine the crude into gasoline and distillates.
In a supportive factor for oil prices, Saudi Arabia this week said it would extend its unilateral 1 million bpd production cut through August, keeping Saudi Arabia’s crude output at about 9 million bpd, the lowest level in several years. Also, Russia pledged Monday that it would voluntarily cut 500,000 bpd of crude output in August.
A bullish factor for crude prices was Thursday’s action by Saudi Arabia’s state-owned Aramco to raise the price of all of its crude grades to customers for delivery in August.
On the negative side, Russia has yet to fully implement its pledged crude production cuts. Russian crude production cuts totaled 350,000 bpd in June, below the 500,000 bpd of cuts it said it would implement in March.
Friday’s global economic news was weaker than expected and bearish for energy demand and crude prices. U.S. Jun nonfarm payrolls rose +209,000, weaker than expectations of +230,000 and the smallest increase in 2-1/2 years. Also, German May industrial production fell -0.2% m/m, weaker than expectations of no change. In addition, Japan’s May household spending fell -4.0% y/y, weaker than expectations of -2.5% y/y.
A bearish factor for crude prices was Monday’s projection by Citigroup that U.S. crude production will break the early 2020 record of 13.1 million bpd by year-end, barring an active hurricane season in the Gulf of Mexico.
Oil prices continue to be undercut by concern about weaker Chinese energy demand. China’s National Petroleum Corp (CNPC), China’s largest oil and gas producer, cut its 2023 China crude oil demand forecast on June 20 to +3.5% to 740 MMT from a March forecast of +5.1% to 756 MMT. In another sign of weak Chinese oil demand, analytics firm Kpler recently reported that China’s crude oil stockpiles rose to a 2-year high in May of 966 million bbl, well above the five-year average of 858 million bbl.
Have a Great Day,
Loren R Bailey, President
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Cell: 479-790-5581
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