Fueling Strategy: Please fuel as needed today/tonight – Be Safe

NYMEX Crude $ 37.18 DN $1.3200
NY Harbor ULSD $1.1965 DN $0.0215
NYMEX Gasoline $1.4226 DN $0.0217

NEWS
Oil futures settled with a loss of more than 3% Monday, giving up nearly half of last week’s gain, as Iran again tossed cold water on market speculation for a production cut and weak economic data from China raised worries about the outlook for energy demand.

The move at a minimum pauses a rally that took crude near its highs of the year following a report from the International Energy Agency that said prices may have bottomed. April West Texas Intermediate crude fell $1.32, or 3.4%, to settle at $37.18 a barrel on the New York Mercantile Exchange after finishing last week roughly 7.2% higher. Monday’s settlement was the lowest since March 8. May Brent crude on London’s ICE Futures exchange lost 86 cents, or 2.1%, to $39.53 a barrel.

Iran reportedly said over the weekend that it still intends to ramp its production level back up to the 4 million barrels a day it was at before sanctions were imposed from about 3 million barrels a day currently, said Colin Cieszynski, chief market strategist at CMC Markets. Other members of the Organization of the Petroleum Exporting Countries have said they’d be reluctant to agree to stabilizing production without the participation of other major oil producers. “Even though this should not have come as a surprise to anyone who has been paying attention and is not unreasonable, it appears the rumored meeting among oil producers to try and stabilize production may be pushed off to April,” Cieszynski said in a note.

In a monthly report issued Monday, OPEC said its oil production fell 175,000 barrels a day in February to 32.38 million barrels a day, citing secondary sources, but output from Iran, Saudi Arabia and Kuwait increased. “Oil markets had been getting technically overbought so Iran appears to have been the excuse for a needed correction,” Cieszynski said.

Meanwhile, data from China Monday showed that industrial production increased 5.4% in January and February, compared with a year earlier. That’s slower than December’s 5.9% pace. Weak data from China tend to raise concerns that demand from the world’s largest energy consumer will slow. The latest move for oil comes on the heels of a brisk rally that lifted prices to their highest levels of the year. The gains have been fueled by supply reductions around the world and the prospect of a coordinated supply freeze by major oil-exporting countries. Darin Newsom, DTN senior analyst, said that fundamentally nothing much has changed for oil and there’s still “plenty of supply” to meet demand. The recent rally left prices “overbought” near the price resistance level, which is pegged at almost $38.20, he said.

The U.S. Federal Reserve’s decision on interest rates due Wednesday may also influence oil prices, depending on its impact on the U.S. dollar, according to Newsom. A stronger dollar can cut demand for dollar-denominated oil on global markets and vice versa.