X

Market Close: Oct 28 Down

Fueling Strategy: Please keep tanks topped today/tonight, Saturday AM wholesale prices will go UP 2 cents – Be Safe Today!

PLEASE USE THE FOLLOWING NUMBER FOR THE FUEL HELP DESK: 479-846-2761

NYMEX Crude $ 48.66 DN $1.0200
NY Harbor ULSD $1.5422 DN $0.0279
NYMEX Gasoline $1.4691 DN $0.0180

NEWS
Oil futures finished lower Friday and booked its first weekly loss since the middle of September, as uncertainty surrounded a weekend meeting of major oil producers who are expected to discuss a proposal to curb crude production.

December West Texas Intermediate crude settled down $1.02, or 2.1%, to $48.70 a barrel on the New York Mercantile Exchange. The U.S. benchmark finished down about 4.2% for the week—its first loss in six weeks, according to FactSet data. For the month, futures are up about 1%. December Brent crude on London’s ICE Futures exchange fell 76 cents, or 1.5%, at $49.71 a barrel, with the global benchmark down 4% for the week.

This weekend, oil officials from members of the Organization of the Petroleum Exporting Countries are scheduled to meet in Vienna to discuss the production proposal. The discussions will be followed by another meeting between OPEC members and non-cartel producers. OPEC is expected to make a formal announcement on Nov. 30 on the fate of the deal. If successfully ratified next month, it would be the first production cut agreement among oil producers in eight years. As divisions within OPEC have “become more apparent, particularly with Iraq’s request for exemption earlier this week, the market has grown increasingly skeptical that the group can have a meaningful impact on supply,” said Robbie Fraser, commodity analyst at Schneider Electric.

On Thursday, Reuters reported that energy ministers from Persian Gulf members of OPEC, including Saudi Arabia, told Russia that they are willing to cut 4% from their peak oil output. Oil prices initially jumped higher on the news that day, but pared gains as “OPEC’s ability to move prices on rhetoric alone begins to wear thin,” said Fraser. Analysts have said that the longstanding feud between Saudi Arabia and Iran, various members’ requests to be exempted from the plan, and the past record of some countries not sticking to their production quotas in the past, all point to a wobbly foundation for a production cut pact.

Moreover, without a pledge from non-OPEC producers such as Russia to also limit production, OPEC producers would have less reason to curb their output. Russia has been in talks with OPEC but hasn’t given firm answers on whether it will join the deal. “A strong commitment to cutting production [among OPEC members] would suggest to the Russians that they could opt out of the proposed deal and still benefit from the higher prices that would result from [OPEC’s] reduction in supply,” said Tim Evans, a Citi Futures analyst, adding that Saudi Arabia is likely to insist that any deal to cut production must be consented to by all producers, including non-cartel countries, and not just a select few. Part of the reason for reluctance to cut output is attributed to worries about growing production in the U.S. A weekly update on the number of active domestic rigs drilling for oil, which is a proxy for oil activity, will be released by Baker Hughes later Friday.

Even if a deal were to be forged in November, it could be a “watered down” version compared with the original proposal of curbing the group’s production by 200,000 to 700,000 barrels a day, said BMI Research. For example, all parties could end up agreeing to freeze their production at their peak output level instead of scaling back, with the exceptions of Libya, Nigeria, and Iran, who could be allowed to ramp up until they reach their normal production levels. “In addition, in the case of an agreement, we expect it to be temporary, perhaps lasting six months in time to increase production for the 2017 summer demand season,” the firm added.

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.