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Market Close: July 31 Mixed, Diesel UP $.0323, Gas DN $.0268

Fueling Strategy: Please “FUEL AS NEEDED” today/tonight, Tuesday NO price changes~Be Safe

NMEX Crude      $ 81.80 UP $1.2200

NYMEX ULSD     $2.9909 UP $0.0323

NYMEX Gas       $2.9290 DN $0.0268

NEWS

September WTI crude oil on Monday closed up +1.22 (+1.51%), and Sep RBOB gasoline closed up +0.79 (+0.27%).

Crude oil and gasoline prices Monday settled moderately higher, with crude posting a 3-1/2 month high.  Recent supply cuts from OPEC+ and Russia are underpinning crude oil prices.

Also, Monday’s global economic news was supportive of energy demand and crude prices.  Eurozone Q2 GDP rose +0.3% q/q and +0.6% y/y, stronger than expectations of +0.2% q/q and +0.5% y/y.  Also, the China Jul manufacturing PMI unexpectedly rose +0.3 to 49.3, stronger than expectations of a decline to 48.9.  In addition, the Japan Jul consumer confidence index rose +0.9 to a 19-month high of 37.2, stronger than expectations of 36.2.

Crude prices have support on signs China will implement policies to revive economic growth.  Last week’s Politburo meeting laid out a pre-growth tone that was more dovish than markets expected.  The ruling Communist Party’s 24-member Politburo, China’s top decision-making body led by President Xi Jinping, promised “counter-cyclical” policies, which imply an easing bias.

A bullish factor for crude oil is a decline in Russian crude shipments.  Vessel-tracking data monitored by Bloomberg showed Russian crude oil shipments in the four weeks to July 23 dropped to a 7-month low of 1.17 million bpd.

In a supportive factor for oil prices, Saudi Arabia earlier this month 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 voluntarily pledged to cut 500,000 bpd of crude output in August.  However, Russia has yet to implement its pledged crude production cuts fully.  Russian crude production cuts totaled 350,000 bpd in June, below the 500,000 bpd of cuts it said it would implement in March.  Meanwhile, OPEC crude production in June rose +80,000 bpd to 28.57 million bpd.

A decline in crude in floating storage is bullish for prices.  Monday’s weekly data from Vortexa showed that the amount of crude oil held worldwide on tankers that have been stationary for at least a week fell -2.2% w/w to 105.06 million bbl as of July 28.

An improvement in Chinese crude demand is bullish for prices after government trade data showed China’s June crude imports rose +4.6% m/m to 12.72 million bpd, the most in three years.

A decline in crude demand in India, the world’s third-biggest crude consumer, is bearish for oil prices.  India’s Jun crude oil imports fell -1.3% y/y to 19.7 MMT, the lowest in 7 months.

Last Wednesday’s weekly EIA report showed that (1) U.S. crude oil inventories as of July 21 were +1.6% above the seasonal 5-year average, (2) gasoline inventories were -7.4% below the seasonal 5-year average, and (3) distillate inventories were -14.4% below the 5-year seasonal average.  U.S. crude oil production in the week ended July 21 fell -0.8% w/w to 12.2 million bpd.  U.S. crude oil production is well below the Feb-2020 record-high of 13.1 million bpd.

Baker Hughes reported last Friday that active U.S. oil rigs in the week ended July 28 fell by -1 rig to a 16-1/2 month low of 529 rigs.  That is well below the 3-1/4 year high of 627 rigs posted on December 2, 2022.  Still, U.S. active oil rigs are more than triple the 18-year low of 172 rigs seen in Aug 2020, signaling an increase in U.S. crude oil production capacity from pandemic lows.

Have a Great Day,

Loren R Bailey, President

Office: 479-846-2761

Cell: 479-790-5581

 

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Categories: Fuel News
loren: Fuel Manager Services Inc. "Serving the trucking industry since 1992" I've been in and around the trucking industry for 45-years beginning in owner operator operations at Willis Shaw Express. I bought a small trucking company that I ran for 6-years then sold and went to work for J.B. Hunt Transport in 1982. After 10-years with Hunt, I started Fuel Manager Services, Inc., we are in our 29th year of serving the American trucking companies. Our simple goal was and is to bridge the gap between the trucking companies and the fuel suppliers.