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Market Close: July 21 Up

Fueling Strategy: Please keep tanks full of fuel today, tonight before 23:00 CST retop your tanks, Thursday prices will jump UP 3 cents – Be Safe!
NYMEX Crude    $ 70.30 UP $3.1000
NYMEX ULSD     $2.0870 UP $0.0743
NYMEX Gas       $2.2167 UP $0.0852
NEWS

Oil jumped the most since mid-April amid broader market gains and after a U.S. government report showed declining fuel and distillate stockpiles during the high-demand summer driving season.

Futures rose 4.6% in New York on Wednesday with U.S. equities advancing as better-than-expected corporate earnings took the focus off concerns about the economic impact of coronavirus flareups. Domestic distillate supplies fell by the most since mid-May and gasoline stockpiles also dropped last week, according to an Energy Information Administration report. Crude is clawing back from losses made Monday, when prices dropped more than 7% on Covid concerns. “The market’s really being driven by macro factors,” said Matt Sallee, a portfolio manager at Tortoise, a firm that manages roughly $8 billion in energy-related assets. “The market wants to move higher after selling off pretty hard on Monday.”

Despite lingering worriers around the spread of the delta variant and its impact on demand, oil market fundamentals suggest tighter supplies and low inventories through the end of the year. Plus, shale drilling in North America is going to slow down in the second half, according to Baker Hughes Inc., even with crude prices at levels that would normally lure back explorers. With shale supply “hindered,” the modest increase from OPEC+ will “not be enough to prevent a deep deficit in the coming month,” said Bart Melek, head of commodity strategy at TD Securities, in a recent note.

Inventories at the nation’s largest storage hub in Cushing, Oklahoma, fell to the lowest since January 2020, according to the EIA report. While overall crude supplies edged higher, a majority of the increase occurred on the West Coast, an area often ignored by traders because its distribution system is isolated from the rest of the country. Oil-product demand in the U.S. is “strong” and “steady,” pointing to a lot of mobility in the country, said Sallee. “The U.S. economy is red-hot, and that’s flowing through to demand,” he said.

Still, a full recovery of oil demand isn’t likely until 2023, with some countries unlikely to reach a 60% vaccination rate, according to Sarah Emerson, an analyst at ESAI Energy.

Have a Great Day,
Loren R Bailey, President
Fuel Manager Services Inc.
“Serving the trucking industry since 1992”
Office: 479-846-2761
Cell: 479-790-5581
 
“To give real service you must add something which cannot be bought or measured with money, and that is sincerity and integrity.”