Market Close: Oct 17 Mixed
Oct 17th, 2022 by loren
Fueling Strategy: Please fuel as needed today/tonight, Tuesday keep your tanks topped out ~ Be Safe
NMEX Crude $ 85.46 DN $.1500
NYMEX ULSD $4.0835 UP $.1050
NYMEX Gas $2.5931 DN $.0378
NEWS
Oil prices were barely changed after struggling to find direction all day as traders contend with both a dimming demand outlook and tightening crude supplies. West Texas Intermediate futures settled barely lower after a topsy-turvy session that sent prices below $85 and above $87, often mirroring the direction of equity markets.
Crude’s fundamentals face substantial headwinds with demand anticipated to slow as China adheres to its Covid Zero policy and the US Federal Reserve expected to further raise interest rates next month. Sluggish growth in China has added to a raft of bearish factors for oil, including aggressive monetary policy by central banks to try and tame inflation and a stronger US dollar.
Simultaneously, OPEC+’s output cut has tightened the supply outlook and created uncertainty for the US-Saudi relationship. The International Energy Agency last week warned OPEC+’s output curbs could tip the global economy into recession, while the US criticized the cuts. White House National Security Adviser Jake Sullivan said options for reevaluating US-Saudi relations include “changes to our approach to security assistance.” He spoke Sunday on CNN’s “State of the Union.”
“Crude oil markets remain exceptionally choppy following the OPEC+ meeting. Counter intuitively, the decision to cut production to support prices has exacerbated volatility as it has increased the geopolitical and policy risk in the market while offsetting some of the fundamental risks,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Management. “The more focused the market is on policy and geopolitical risk, the more volatile they will remain.”
Adding to supply concerns, trading houses and refiners are racing to book storage tanks in Rotterdam in the coming months on expectations of a supply crunch after European Union sanctions on Russia take effect, according to a storage official at Koninklijke Vopak NV. The storage company has seen heightened inquiries about using its tanks to bring in Russia’s Urals grade into the northwest Europe refining hub up to the Dec. 5 cutoff, the official said.
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