FUELSNews 360° – Executive Summary

The fourth quarter of 2018 brought a sharp break from the rising market seen in the first three quarters. The market seemed out of control, spiraling lower and causing crude oil prices to fall 40% within the span of just three months.

Today, factors appear overall bullish for oil prices. With crude prices ending 2018 at just $45, there’s significant room for prices to rise in the coming months. OPEC, Canada and other producing countries appear to be pushing for higher prices, and the expiration of sanction waivers in May should bring the market tighter, as well.

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Oil Market Summary

The fourth quarter of 2018 brought a sharp break from the rising market seen in the first three quarters. The market seemed out of control, spiraling lower and causing crude oil prices to fall 40% within the span of just three months.

Contributing to the significant loss was an oversupply of crude oil resulting from Trump’s Iran sanction waivers. After the rest of the world had stepped up to fill the supply void, the waivers allowed up to 75% of Iran’s crude to remain on the market, immediately sending prices
lower. Once prices crashed below $60/bbl, technical factors took over, which are covered in the Fundamentals section on page 12.

A broader decline in financial markets accompanied crude oil’s crash, with equity markets responding to economic concerns ranging from emerging economy weakness to US-China trade talks. The US economy is on track to set a new record-long expansion period in July
2019, surpassing the 10-year tech-driven boom of the 90s. As the expansion continues, economists are bracing for deceleration and a potential recession either this year or next which would push oil prices lower. On page 10, economic trends are covered in greater detail.

Looking ahead to 2019, factors appear overall bullish for oil prices. With crude prices ending 2018 at just $45, there’s significant room for prices to rise in the coming months. OPEC, Canada and other producing countries appear to be pushing for higher prices, and the
expiration of sanction waivers in May should bring the market tighter,
as well.

Fuel Price Trends

Fuel prices have also seen sizable losses in the past few months as oil prices plummeted. Both diesel and gasoline prices have fallen roughly 70-80 cents per gallon, to the benefit of consumers nationwide. Of the two products, however, gasoline saw steeper losses, with diesel rates maintaining relative strength in Q4.

At a regional level, local economics have been driving national trends. For instance, seasonally higher prices in New York Harbor this quarter led suppliers to redirect supplies northward, pulling fuel from the Southeast and Midwest to meet heavy heating oil
demand. The result was higher fuel prices not just in the Northeast, but in surrounding areas as well. Simultaneously, Mexico’s faltering oil sector has also created a demand sink to the south, leaving Gulf Coast refineries to choose whether to send product north to New York, south to Mexico, or keep it in the Gulf/Southeast region. Gabe Aucar writes about these trends on page 18.

Biofuel economics have remained tied to political fluctuations. Small refinery exemptions and a conservative EPA have biofuel producers concerned about future demand. Although petroleum-based diesel prices fell in Q4, biofuel prices remained steady, shifting economics to favor lower bio blends. Turn to page 22 to read Sara Bonario’s explanation of renewable market dynamics.

Market Insights

With prices so low, many fleets around the country have sought ways to sustain lower fuel costs throughout the year. These efforts have been especially important for government fleets, who have an obligation to taxpayers to minimize costs. Josh Epperson, Mansfield’s VP of Strategic Accounts, explains how government fleets can optimize their fueling programs and meet agency objectives on page 29.

Whether you run a large fleet or a small one, you’ve probably considered mobile fueling, a growing trend in fuel logistics. Transparent pricing, simplified logistics, and labor savings are just some of the reasons why consumers are turning to mobile fueling. On page 32, mobile fueling expert Billy Lawder explains how to determine whether mobile fueling is right for you

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