Week in Review – June 14, 2024

Oil prices defied early declines on Thursday, settling higher for a fourth consecutive day. This uptrend comes amid signs of easing inflation in the United States and bullish comments from OPEC. The benchmark July WTI contract on the NYMEX rose 12 cents to settle at $78.62/bbl. The August WTI contract also climbed, ending yesterday’s session at $78.26/bbl, up 11 cents. Over the past four trading days, the front-month WTI contract has increased by more than $3/bbl.

California drivers are enjoying some relief at the pump. Gas prices have dropped for eight straight weeks, falling over 50 c/gal in the last two months. This trend coincides with increased refinery activity in the state. Refinery operations are running at their highest level this year, reaching 89.7% capacity, compared to 88.5% the week before. Gasoline stockpiles on the West Coast remain stable at 31.1 million barrels, which is 1.5 million barrels higher than last year at this time.

The Atlantic hurricane season may be brewing up sooner than expected. On Thursday, the National Hurricane Center (NHC) signaled a potentially active season by announcing they’re monitoring two low-pressure systems. One sits off Florida’s east coast, while the other swirls in the southwest Gulf of Mexico. These systems have the potential to develop into tropical cyclones. The NHC forecasted a 20% chance of cyclones forming in the next week. However, heavy rain is still expected across much of Florida throughout the week, regardless of any cyclone development.

This comes on the heels of severe flooding in South Florida, where nearly two feet of rain caused a state of emergency to be declared. The NHC is also monitoring another low-pressure system in the southwest Gulf of Mexico that could develop into a storm over the weekend or early next week.

The development of tropical storms, especially along the Gulf Coast, can disrupt fuel production in the region’s refineries. Storms making landfall in populated areas can decrease fuel demand due to power outages and transportation disruptions.

Prices in Review

Crude opened on Monday at $75.35 and increased the next three days. This morning, crude opened at $77.96, down from yesterday but up by $2.61 or 3.46% for the week.

Diesel opened the week at $2.255 and saw steady increases throughout the week. This morning, diesel opened at $2.4847, an increase of nearly 13 cents or 5.5%.

Gasoline opened the week at $2.3767 and saw much more up and down momentum than crude and diesel. This morning, gasoline opened at $2.4083, an increase of 3 cents or 1.329%.