Fueling Strategy: Please partial fill tonight, Thursday AM wholesale prices will drop 1.5 cents – Be Safe Today

NYMEX Crude $ 48.32 DN $1.3400
NY Harbor ULSD $1.5153 DN $0.0341
NYMEX Gasoline $1.6122 DN $0.0267

NEWS
Oil futures settled sharply lower Wednesday to tally a third-straight monthly loss, underscoring investors’ belief that the extended-production caps by major producers and the summer-driving season in the U.S. won’t do enough to reduce global supplies.

After Thursday’s plunge in the wake of what was decided by the Organization of the Petroleum Exporting Countries and other non-cartel producers, like Russia, the U.S. oil benchmark has failed to reclaim the $50-a-barrel level. “We see the near-term trend for oil prices as buffeted by two primary forces: the push-pull tension between OPEC and U.S. shale producers on the supply side, and continued modest growth prospects on the demand side,” said Katrina Lamb, head of investment strategy and research at MV Financial.

July West Texas Intermediate crude dropped $1.34, or 2.7%, to settle at $48.32 a barrel on the New York Mercantile Exchange—for the lowest finish since May 12. For the month, prices declined of roughly 2.1%, based on the $49.33 finish for the most-active June contract on April 28. Prices marked a third monthly loss in a row. On it expiration day, July Brent on London’s ICE Futures exchange slid $1.53, or 3%, to $50.31 a barrel, with the contract down about 3.4% for the month. August Brent ended at $50.76, down $1.48, or 2.8%.

“It has been a bit of a wild ride in the oil market over the last two weeks as a speculative rally became overextended into the OPEC meeting and a ‘sell the news’ reaction followed the as expected announcement of a nine-month extension of the current quota policy,” said Tyler Richey, co-editor of the Sevens Report. The initial OPEC-led production cuts has so far done little to cut global inventories. And the initial price jump after the deal was announced six months ago helped encourage new U.S. drilling activity and send oil production there rebounding after 2016’s decline.

The latest data from the Energy Information Administration had U.S. production averaging 9.3 million barrels a day, 6.3% higher than year-earlier levels. The increase is hardly a surprise given oil drilling has risen for 19 straight weeks. Readings for last week will come Thursday. Meanwhile, Rystad Energy predicted in a report Wednesday that U.S. oil production could reach an all-time high of 10 million barrels a day before the end of this year. Analysts polled by S&P Global Platts expect the EIA on Thursday to report a fall of 3.2 million barrels in crude-oil stockpiles for the week ended May 26—which would mark an eighth weekly decline in a row. The data is delayed by a day because of the Memorial Day holiday. Ahead of that, the American Petroleum Institute will issue its U.S. petroleum supply data late Wednesday.

Market watchers now say oil prices need to stay weaker for longer, more specifically below $50, to effectively impede U.S. shale companies from investing further in their oil holdings.

Have a great day,

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