Fueling Strategy: Please keep tanks topped tonight, Friday AM wholesale prices will go UP again 3 cents – Be Safe

NYMEX Crude $ 49.04 UP $.2900
NY Harbor ULSD $1.6049 UP $.0079
NYMEX Gasoline $1.6446 UP $.0273

NEWS
Oil prices notched another two-month high on Thursday, as support from four weeks of falling U.S. crude supplies contributed to a fourth-consecutive session of gains.

September West Texas Intermediate crude rose 29 cents, or 0.6%, to settle at $49.04 a barrel on the New York Mercantile Exchange. Prices have now climbed for four sessions in a row and they finished at their highest level since May 30, according to FactSet data. September Brent crude on London’s ICE Futures exchange added 52 cents, or 1%, to $51.49 a barrel. Week to date, both WTI and Brent crude were up about 7%—set for their highest weekly gains in a month. “The near-term trend of falling oil [stockpiles] is helping fuel a rally in the energy space; however, the trend of rising U.S. oil production remains relentless,” said Tyler Richey, co-editor of the Sevens Report. “Until that trend begins to show signs of slowing, the upside gains in the energy market will be limited,” he said.

The Energy Information Administration on Wednesday said U.S. crude stockpiles fell a bigger-than-expected 7.2 million barrels last week, the fourth-straight drop. Total domestic crude production edged down by 19,000 barrels to 9.410 million barrels a day, but output in the lower 48 states climbed by 35,000 barrels to 9.005 million barrels a day—topping the 9 million level for the first time in over two years, according to Richey. Still, U.S. supplies of gasoline and distillates also fell last week, according to the EIA data.

On Nymex Thursday, August gasoline rose 2.7 cents, or 1.7%, to $1.645 a gallon, while August heating oil added under a penny to $1.603 a gallon.

The petroleum inventory declines imply strong demand growth as refineries are eager to capture still-healthy margins, said analysts. “Is it possible we’ve maxed out? There is that possibility,” said Bob Yawger, director of the futures division at Mizuho Securities USA, joining a growing group of analysts who believe there is not much room left for U.S. production to grow for now because of the oil-patch capital-spending slump seen in 2015 and 2016 as prices crashed.

Investors have started to come around to the idea that output-curtailment efforts by the Organization of the Petroleum Exporting Countries and other major producers may be starting to show results. “The rebalancing act has been a difficult and lengthy process,” said Mark Watkins, regional investment manager at the Private Client Group at U.S. Bank in Utah. “The world has an ample supply of oil, so for the rebalancing act to truly take hold, demand needs to improve.” But the tide for production is slowly turning, say some, contending that prolonged low prices may have started to weed out high-cost producers and investors in the U.S. Some oil-field service companies have announced lower estimates for this year’s exploration and production budgets, including Anadarko Petroleum Corp. Prices have also found support from concerns about Venezuelan oil supplies.

At the same time, OPEC’s production-curtailment initiative is also seeing gradual signs of success. That as Saudi Arabia announced Monday it will decrease August exports, a moved emulated by Kuwait.

Have a great day,

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