Fueling Strategy: Please fill as needed tonight, Wednesday AM look for little to no change in wholesale prices – Be Safe

NYMEX Crude $ 47.89 UP $1.5500
NY Harbor ULSD $1.5685 UP $0.0516
NYMEX Gasoline $1.5962 UP $0.0394

NEWS
Oil prices rallied Tuesday to settle at their highest level in seven weeks, as fresh pledges from Saudi Arabia and Nigeria to, respectively, reduce crude exports and limit output raised hopes of a market rebalance.

September West Texas Intermediate crude rose $1.55, or 3.3%, to settle at $47.89 a barrel on the New York Mercantile Exchange. That was the highest finish since June 6 and the best single-session dollar and percentage gain of the year, according to FactSet data. September Brent crude on London’s ICE Futures exchange added $1.60, or 3.3%, to $50.20—the highest settlement since the first day of June.

At the Organization of the Petroleum Exporting Countries’ committee meeting on Monday in Russia, which included some non-OPEC producers, Saudi Arabia announced it would cut August exports to 6.6 million barrels a day, which would be a million less than a year earlier. The kingdom, the world’s biggest crude exporter, typically rolls back shipments in the summer as domestic demand peaks, though a shipment cut of that size would notably expedite market rebalancing, some analysts contend.

Meanwhile, Nigeria, which has been exempt from this year’s OPEC-led production-cut deal, vowed to keep daily production at no greater than 1.8 million barrels. The cartel’s latest data put the country’s output at 1.64 million. He added that if Libya, another OPEC nation currently not in the cutback deal, caps its output at 1.25 million barrels a day (some 25% above current production), the scope of Saudi Arabia’s export cut would still be sufficient to offset potential production increases from Libya and Nigeria.

In emailed commentary Tuesday, however, Jameel Ahmad, vice president of market research at FXTM, was a bit more pessimistic. “OPEC is still trapped in what could be described as a ‘mission impossible’ scenario,” he said. “The cartel is ultimately being trapped between a combination of an ongoing oversupply in the atmosphere, being pressured towards making further cuts and not being in control of production from elsewhere around the globe.”

Oil prices have been in a funk for three years amid a persistent supply glut. To pare the global inventories, OPEC and a host of non-cartel heavyweights, such as Russia, agreed to shrink their collective production by 1.8 million barrels a day through March of next year. The market impact has been minimal thus far amid output growth from the U.S. this year, but some say the effort is a sound solution to bring supply and demand closer to equilibrium, or perhaps push the market into a slight deficit.

Chinese demand, meanwhile, continues to provide support and there are signs this year’s shale upswing may be ebbing. New-drilling growth has slowed this month, Baker Hughes data show, while oil-field-services heavyweight Halliburton Co. said Monday that activity is showing signs of plateauing. That comes as U.S. government data on Wednesday are poised to show another drop in domestic oil supplies. Analysts surveyed by S&P Global Platts expect the Energy Information Administration Wednesday to report a weekly decline of 2.5 million barrels in domestic crude inventories. The American Petroleum Institute will issue its own petroleum-supply data late Tuesday.

Have a great day,

Loren R. Bailey, Founder & Owner
FUEL MANAGER SERVICES INC
“Serving the Trucking Industry Since 1992”