After Friday’s price rebound, oil prices are beginning to ebb lower. Last week brought significant losses in oil prices, falling from nearly $75/bbl to just above $70/bbl. This morning, WTI crude is trading at $70.98, down 36 cents since Friday’s close.
Fuel prices are also in the red this morning, after mixed trading on Friday. Gasoline prices picked up roughly one cent, while diesel prices actually shed a penny. This morning gasoline prices are trading at $1.9205, down 2.2 cents from Friday’s close. Diesel prices are currently $2.3071, down another penny.
Markets are nervously eyeing Saudi Arabia this morning as the country attempts to respond to the disappearance of journalist Khasoggi. President Trump threatened punishment against Saudi officials, which the Saudi government responded to by threatening economic retaliation. Given the tightness of global oil supplies and Saudi Arabia’s position as a major oil producer, any escalation of tensions between the two countries could prove extremely bullish for oil prices.
Last week a number of important industry reports were published by the IEA, the EIA, and OPEC. All three reports showed lower demand expectations for 2019. The EIA’s report shows Brent crude oil average $75/bbl in 2019, with WTI a bit below that level. US production will rise to 11.8 million barrels per day next year, up from 11.1 MMbpd in September. This winter, heating degree days (number of degrees a day’s average temperature is below 65⁰ F) is expected to be a bit higher than last year, representing a slightly colder winter than last year. For diesel users, this is an important update given winter diesel gelling concerns. Click Here to read the EIA’s Winter Fuels Outlook.
Hurricane Michael Update
Mansfield is officially moving to Code Green for all regions previously on alert for Hurricane Michael. One terminal in Panama City, FL – where Michael made landfall – remains offline, and Mansfield’s supply department is working to ensure reliable supply in the area. All other markets have normalized for both supply and freight capacity for fuel. Mansfield is currently monitoring a disturbance forming over Central America, which shows a 40% chance of forming into a Tropical Depression over the next few days. Hurricane Michael originated in the same area, so that storm will be worth watching over the next few days.