Week in Review- June 24, 2022

Crude oil prices are on track to post some losses this week, but that’s not translating to fuel price relief. After last Friday’s closing price of $109/bbl, crude oil sprung higher on Tuesday after the long trading weekend. However, statements on interest rates from Federal Reserve officials stoked recession fears, causing prices to fall later in the week. Although crude oil opened at $103 this morning, prices have since moved higher into the $107 range – a small net decline for the week.

On the flip side, fuel prices are in line with last week’s closing price. There’s been a litany of articles written on the lack of refining capacity worldwide, which is increasing the cost of gasoline and diesel relative to crude oil. The 3:2:1 crack spread, the rough margin made by refineries from converting crude oil into gasoline and diesel, is now above $60/bbl, far from the typical $11-$25 range. Adding refineries is a slow and expensive process, so don’t expect a sudden surge in refining capacity.

During a typical week, the EIA’s Wednesday oil market report is a defining feature for fuel prices, covering stats such as inventories, demand, and refinery utilization. On holiday weeks like this, the report is delayed by one day. This week, however, the EIA was unable to report on oil market trends due to technical challenges, which the agency clarified was not caused by a cyberattack. Regardless of the reasoning, the delayed report has removed one source of insight (or often, a source of volatility) and  kept traders in the dark on oil market fundamentals.

Diesel prices closed last week at $4.34, after sinking during the Friday trading session. During the week, prices springboarded higher, reaching as high as $4.50 before falling back. Prices are once again trading within a few cents of $4.34.

Like diesel, gasoline prices are very close to their closing price from last week, meaning no significant change in prices. Last week, gasoline closed at $3.79, though this week saw prices reaching up to $3.85 per gallon. This week, prices are trading around the same level, ranging from $3.78-$3.80 in today’s trade.