Today’s Market Trend

WTI crude prices have recovered the $49.50/b mark this morning, after staving off a potential drop below $48/b yesterday. WTI opened at $49.27/b today, a small increase of $0.05, or 0.10%, below yesterday’s opening price. Current WTI prices are $49.52/b, a continued recovery of $0.55 above yesterday’s closing price. Both crude and product prices trended down this week, with a marked drop yesterday. WTI prices went as low as $48.20/b on Thursday. But prices recovered to above $49/b by the close of the day, and they have strengthened this morning.

Diesel opened at $1.5162/gallon in today’s trading session. This was a drop of 1.22 cents (0.79%) below yesterday’s opening price. Current prices are $1.5045/gallon, down by 3.22 cents from yesterday’s closing price. Diesel prices have opened lower for ten of the past eleven trading sessions, dropping by 13.83 cents, or 8.4%, since April 12^th. Diesel prices are at their lowest point in a month.

Gasoline opened at $1.5553/gallon today, down 2.4 cents, or 1.52%, from yesterday’s opening. This was the lowest opening price since February 28^th. Prices are $1.5831/gallon currently, a significant rise of 3.31 cents from yesterday’s close. Gasoline prices have decreased in ten of the past eleven trading sessions, shedding a total of 20.86 cents, or 11.8%, since April 12^th.

Adding to supply concerns, Bloomberg reported that Libya’s Sharara oilfield resumed production after a nearly two-week outage. Force majeure was lifted by the National Oil Company (NOC,) and the pipeline leading to the Zawiya refinery and export terminal has been re-opened. The NOC hopes to expand production from the Sharara field to 270 kbpd later this year.

Libya is not part of the OPEC production cut agreement, and the market generally accepts the fact that internal unrest will cause significant ups and downs in production and exports. OPEC plans to meet in May to discuss a possible extension of the production cuts. Most of the participants appear amenable to an extension provided a consensus is reached. Although Russia received criticism in the first quarter about not fully meeting its 300 kbpd cut commitment, this morning Russia’s Energy Minister announced that Russia had now met the target. OPEC reports that compliance levels are 100% for OPEC members and 85% for Non-OPEC members.

While the majority of the market fundamentals were bearish for prices, prices have rebounded today. Three possible explanations suggest themselves to us: First, the announcement by Russia that it has met its production cut commitment, and that an extension of the OPEC production cut agreement appears more likely. Second, economic optimism over the proposed cut in the U.S. corporate tax rate, and the posting of corporate earnings. The Down Jones Industrial Average is once again touching upon 21,000. Third, there may be a resurgence of geopolitical risk based on yesterday’s exclusive interview by Reuter’s with President Trump, where the President stated “There is a chance that we could end up having a major, major conflict with North Korea. Absolutely.”