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Market Close: Oct 21 Down

Fueling Strategy: Please fuel as needed today/tonight – Be Safe
NYMEX Crude    $  53.31 DN $.4700
NYMEX ULSD     $1.9406 DN $.0065
NYMEX Gas       $1.6072 DN $.0158
NEWS

Oil futures settled at a nearly two-week low Monday, as investors failed to shake worries that growing signs of economic weakness will eventually hurt demand for crude oil. West Texas Intermediate crude for November delivery fell 47 cents, or 0.9%, to end at $53.31 a barrel on the New York Mercantile Exchange, after the U.S. benchmark contract posted a 1.7% weekly decline. The November contract, expires at Tuesday’s settlement. Global benchmark Brent crude for December lost 46 cents, or 0.8%, to finish at $58.96 a barrel on the ICE Futures Europe exchange, following a weekly skid of 1.8%. Both benchmark crude contracts finished at their lowest since Oct. 8, according to FactSet data.

Markets participants have been digesting evidence that some of the biggest economies in the world are weakening, which could deliver a hit to overall crude uptake in the near term. On Friday, China’s National Bureau of Statistics released data showed slower-than-expected growth from the second-largest economy. Gross domestic product expanded at a 6% pace in the third quarter, the slowest in 27 years. On top of that, signs that some major producers aren’t adhering to production agreements are also weighing on sentiment. Russia on Sunday said that it failed to comply to its commitments in September to curb production, citing increases in natural-gas condensate production ahead of winter, Reuters reported.

The current output pact between the Organization of the Petroleum Exporting Countries and its allies to cut 1.2 million barrels a day runs through March 2020. Meanwhile, Kuwait and Saudi Arabia were having discussions to restart production in oil fields that they manage jointly, which could deliver some 500,000 barrels a day in crude, pressuring prices, according to Reuters. The fields Khafji and Wafra have been shut for the past four years. “Kuwait expects to sign an agreement with Saudi Arabia to restart production at the 500,000 bpd neutral zone along their border within 30 to 45 days,” wrote Robert Yawger, director energy at Mizuho Securities U.S.A., in a daily research report.

On a technical basis, market participants say a bearish trend may be taking hold of crude trade, with an increase in bets that prices will fall, according to the weekly Commitments of Traders Report from the U.S. Commodity Futures Trading Commission released on Friday. “Oil prices are sagging at the start of the week on rising bearish bets from hedge funds and after Russia did not hold up to their end of the supply reduction pact. The smart money has turned very bearish on WTI, with bearish bets rising almost threefold according to the [report] which highlights data for the week ending Oct. 15,” wrote Edward Moya, senior market analyst at brokerage Oanda, in a daily research report.  “A continuation of rising production levels along with storage levels reaching a surplus to the five-year average last week are factors likely helping to keep pressure on prices,” Christin Redmond, commodity analyst at Schneider Electric, wrote in a daily note.

Have a Great Day,
Loren R Bailey, President
Fuel Manager Services Inc.
Office: 479-846-2761
Cell: 479-790-5581
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.