Fueling Strategy: Please keep tanks topped today, Thursday AM wholesale prices will go back up – Be Safe

NYMEX Crude $ 45.34 UP $1.2900
NY Harbor ULSD $1.4290 UP $0.0240
NYMEX Gasoline $1.3990 UP $0.0344

NEWS
Oil futures ended higher Wednesday after U.S. government data revealed a drop in crude inventories, marking the third such unexpected weekly decline in a row. Expectations swaying back toward the likelihood of an output deal among major oil producers next week also delivered a shot in the arm for the Fed.

November West Texas Intermediate crude which had been up about 2.8% just before the Fed announcement, settled up $1.29, or 2.9%, at $45.34 a barrel on the New York Mercantile Exchange. Brent crude for November delivery however, was last up 10 cents at $46.93 a barrel in electronic trading on London’s ICE Futures exchange.

The U.S. Energy Information Administration reported Wednesday that domestic crude supplies fell by 6.2 million barrels in the week ended Sept. 16. A 2.8 million-barrel climb was expected by analysts polled by S&P Global Platts, while theAmerican Petroleum Institute late Tuesday reported a larger drop of 7.5 million barrels.

Oil held above $45 a barrel on the inventory data and the Fed’s decision, which suggests a “lower for longer” rate environment, said Nico Pantelis, head of research at Secular Investor, in emailed comments. “We continue to look to the upside for oil prices in the next weeks, where $50 is the target area for us,” Pantelis said. Those gains, however, could be capped by oil production and rig-count data, said Robert Haworth, senior investment strategist with U.S. Bank Wealth Management. “In our view the range-bound market thesis likely remains in place, reflecting recent increases in U.S. production and rig counts, which will likely limit the upside to prices,” Haworth said in emailed comments. The market may be “seeing the drop in Venezuelan oil production [due to its economic crisis] starting to take its toll, and demand is stronger than thought” for U.S. oil, Phil Flynn, senior market analyst at Price Futures Group, told MarketWatch. The EIA has now reported unexpected supply declines for three weeks in a row. Supplies fell 600,000 barrels for the week ended Sept. 9, and the drop of 14.5 million barrels for the week ended Sept. 2 was the largest since 1999. “Despite two significant draws this month a lot of push and pull still exists” for oil, said John Macaluso, an analyst at Tyche Capital Advisors.

Futures received an added boost following a widely expected decision by the Federal Reserve decided to keep interest rates steady. Investors focusing on the Fed’s monetary policy meeting were greeted with the expected outcome of no September rate increase. Hints at a rise in December drove the U.S. dollar lower. With commodities such as oil being priced in the greenback, big moves in the dollar usually have an outsize impact on prices.

Total domestic crude production, meanwhile, edged up by 19,000 barrels a day to 8.512 million barrels a day, the EIA data showed. Gasoline supplies fell by 3.2 million barrels, while distillate stockpiles rose by 2.2 million barrels, according to the EIA. The S&P Global Platts survey called for a fall of 50,000 barrels for gasoline and a draw of 1.2 million for distillate stocks, which include heating oil.

Oil producer talk
There has been speculation that the informal meeting of members of the Organization of the Petroleum Exporting Countries planned for Sept. 28 at the International Energy Forum conference in Algiers will be considered a “formal” meeting. If that is true, the “likelihood of a major policy announcement at this meeting has gone up dramatically,” said Flynn. “With all of the major policy players from Russia, Saudi Arabia and Iran suggesting that a deal is going to get done, it means that a deal is going to get done.” Russia’s permanent representative to OPEC, Vladimir Voronkov, has said Russia would back a deal to stabilize oil markets for a year, according to Moscow-based news agency Interfax. But not everyone is quite so sure that will happen. “We just cannot see how OPEC and Russia would be able to reach a freeze accord and even less so a production cut accord,” said Bjarne Schieldrop, chief commodities analyst at SEB Markets.

Even if a production freeze is achieved, market fundamentals will see little change given that most members are pumping at or near maximum capacity, according to BMI Research. OPEC’s production grew by 500,000 barrels a day in July and August owing to record Saudi Arabian production and more coming from Iraq, Iran and Kuwait.