Oil prices are once again starting the week strong, with prices moving back towards the top of the $50-$60 range we’ve seen since May. Crude oil is currently trading at $57.62, up $1.10 from Friday’s close.
Fuel prices are trading higher as well. Diesel prices are currently trading at $1.9266, up 2.6 cents since Friday’s close. Gasoline prices are trading at $1.5805, up 0.6 cents.
Prices made moderate gains last week on resumed trade talks between the US and China. Markets are hoping to at least avert further escalation between the two economic giants; a deal seems quite farfetched at this point since neither Trump nor China have strong incentive to reach a deal ahead of the 2020 US elections. Adding to bullish sentiments last week was another reported drop in US rig counts, signaling slowing US output growth.
Oil markets were rocked over the weekend when Saudi Arabia replaced its Energy Minister Khalid al Falih with Prince Abdulaziz bin Salman, a member of the royal family. The move marks the first time a royal family member has held the Energy Minister title, leading many to speculate that King Salman and the Crown Prince Mohammed bin Salman are consolidating power ahead of Saudi Aramco’s initial public offering, which is a key component of Saudi Arabia’s plan to diversify its economy. Falih, who championed the OPEC and Non-OPEC production agreement in 2017, was not a strong supporter of the IPO. Prince Abdulaziz bin Salman comes with significant experience as an OPEC diplomat, and he is not expected to substantially alter Saudi Arabia’s oil strategy in the near future.
Hurricane Dorian proved to be somewhat of a non-event for oil markets over the weekend, with minimal impacts to fueling infrastructure in the US. Still, elevated demand throughout the Southeast taxed carrier capacity and made fueling operations difficult. Tomorrow marks the official peak of hurricane season based on historical NOAA data, though storms may appear as late as December.
The beginning of this season was surprisingly quiet, with only four named storms including Dorian (you can count based on the alphabetized names). But since Dorian formed over a week ago, we’ve gone through several more, and the next named storm will be Humberto. In August, NOAA updated their official forecast to predict above-normal activity in the latter half of the hurricane season, so gear up for more choppy weather in the weeks ahead.