WTI crude prices have retreated to the $48.50-$48.75/b range this morning. Yesterday brought a rally that reclaimed the $50/b mark for a time, but prices subsided through closing, and they ended up down by $0.27 for the day. WTI opened at $49.65/b today, a decline of $0.28, or 0.56%, below yesterday’s opening price. Current prices are $48.61/b, a continued fall of $1.05 below yesterday’s closing price.
Diesel opened at $1.5523/gallon this morning. This was a decline of 0.98 cents (0.63%) below yesterday’s opening price. Current prices are $1.522/gallon, down by another 2.74 cents below yesterday’s closing price.
Gasoline opened at $1.64/gallon today, down slightly by 0.16 cents, or 0.1%, from yesterday’s opening. Prices are $1.611/gallon currently, down 2.79 cents from yesterday’s close.
Futures prices have weakened since the OPEC meeting last week. Some traders had been betting on the idea that the OPEC cuts might go deeper, and that Turkmenistan and Egypt might join in the cuts for the non-OPEC side. The steady-as-she-goes approach ultimately adopted by the OPEC-NOPEC group is widely thought to be inadequate to cope with oversupply. A spate of selling has resulted.
The cuts made by OPEC are being countered in part by increasing production in the U.S., Canada, Libya and Nigeria. The U.S. active rig count, for example, has climbed by 243 rigs this year, bringing the total rig count for 908 for the week ended May 26th. Libya’s National Oil Corporation (NOC) announced plans to raise crude production to 800 kbpd next month, with a goal of 1.1 mmbpd output by August. Libyan crude production has been hamstrung by chronic violence, and production averaged only 390 kbpd in 2016. Libya’s output during the first quarter of 2017 rose to 656 kbpd.
The EIA has released data on gasoline and diesel retail prices for the week ended May 29th. The data are delayed by one day because of Memorial Day observance. At the national level, gasoline retail prices rose by 0.7 cents/gallon. Diesel prices rose by 3.2 cents/gallon. Prices surged during the week leading up to the OPEC meeting, but prices have weakened since then. If prices continue to ease, it is likely that this will be reflected in next week’s retail prices. Details follow in our second article.