Oil prices are trending higher this morning as recovery work begins for Hurricane Florence. WTI crude is trailing far behind Brent crude – to the tune of roughly $9 – as Iran sanctions tighten international supplies more than domestic US supplies. WTI crude is currently trading at $68.97, hardly changed since Friday’s close.
Unlike crude, which eked out small gains on Friday, both gasoline and diesel prices fell on the last trading day of the week. This morning, however, both products are in the black. Diesel prices are currently trading at $2.2164, a gain of 0.7 cents. Gasoline prices are $1.9888, a 1.9 cent gain.
Major market-moving news was light over the weekend. The Baker Hughes rig count report showed a 7 rig gain for the US, signaling continued growth in US output, which could help suppress rising prices. Another bearish note was the CFTC data, which showed a decline in bullish sentiment after two weeks of growth in WTI crude net long positions.
Trump is expected to make an announcement in the near future imposing tariffs on $200 billion of Chinese goods – a move that would severely escalate the trade war and impact both countries’ economies. Oil market reports released last week noted that while oil demand forecasts remain strong, they could experience some downside revisions if the trade war continues escalating.
Storm Update – Florence Flooding North Carolina
Hurricane Florence recovery is underway, even while the storm continues pouring rain on the northern part of North Carolina. The death toll from Florence was last reported at 17, and officials have ordered evacuations in inland areas as dams near their failure points and threaten downstream areas. Over half a million people in the state remain without power.
Florence has been downgraded to a Tropical Depression now as the system makes its way around the East Coast, but its reduced status doesn’t mean the damage is done. The storm brought over 30 inches of rain in some spots, and severe flooding is rampant throughout the Carolinas. Many roads are closed until the water subsides. As water flows from inland rivers towards the Atlantic, they’ll reach areas already saturated with water, causing further flooding later in the week.
Although the storm did not have any direct impact on the two major pipelines flowing through the Carolinas – Colonial and Plantation – local fuel supplies are currently tight given lack of carrier capacity and power outages affecting terminals. Many terminals in Charleston, Wilmington, and Selma shut on Friday – some reopened over the weekend and others have not responded with updates. In eastern Carolina markets, expect fuel deliveries to be tight for the next few days as carriers spend extra time traversing dangerous roads.
Isaac has dissipated and currently is not an active storm; however, the system is heading towards the Gulf where warm waters and moist air could potentially bring about a revival. Models are mixed on whether the storm will continue to fizzle out or grow into a Tropical Storm over the next five days. If the system does regain strength, it will be worth watching carefully given how warm Gulf waters are.
Mansfield remains on Code Red for North Carolina, South Carolina, and Virginia. Although supplies and carriers are currently available, carrier capacity is expected to become tighter as flooding subsides and more deliveries are made into eastern North Carolina. Maryland, Georgia, Florida, and South Texas – which had been on Code Orange due to potential storm concerns – have all been moved to Code Green as storms dissipate.
This article is part of Alerts