Crude prices this week had two up-and-down cycles, with an overall upward trend, before news came out late yesterday announcing the U.S. airstrikes on the Shayrat airfield in Syria. The week appeared to be on its way to ending in the black even without the volatility caused by the airstrikes.
WTI crude prices opened the week at $50.69/b. WTI opened this session at $51.70/b, an increase of $1.01, or 2.0%, from Monday’s opening. During the week, prices ranged from a low of $49.88/b on Tuesday to a high of $52.94 on Friday, a range of $3.06. Current prices are $52.14/b, up $0.44 from yesterday’s close.
Diesel prices opened Monday at $1.5634/gallon. Diesel opened this morning at $1.612/gallon, a significant increase of 2.5%, or 3.91 cents, for the week. Prices ranged from a low of $1.5527/gallon on Monday to a high of $1.6439/gallon on Friday, a large price range of 9.12 cents. Prices currently are $1.6243/gallon, an increase of 1.14 cents from Thursday’s close.
Gasoline prices opened Monday at $1.7007/gallon. Today, gasoline opened at $1.7303/gallon, an increase of 1.7%, or 2.96 cents, for the week. Prices ranged from a low of $1.6839/gallon on Tuesday to a high of $1.766/gallon on Friday, a range of 8.21 cents. Prices are $1.7332/gallon currently, up 0.36 cents from Thursday’s close.
During the week, prices strengthened Monday and Tuesday when industry surveys forecast a crude stock draw and significant product inventory drawdowns. The official EIA data was released later Tuesday, quelling these expectations. The EIA weekly data reported another increase in crude inventories, of 1.566 mmbbls. In the thirteen weeks so far this year, crude inventories have grown in all weeks save one. The total addition to the non-SPR stockpile now stands at 52.4 mmbbls. Moreover, the product drawdowns were smaller than forecast: 0.618 mmbbls of gasoline and 0.536 mmbbls of diesel.
Prices weakened on the bearish EIA data, but they recovered and had been trending upward before news of the U.S. attack caused prices to spike. It is too soon to assess the full impact of the airstrikes, but military conflict in the Middle East inevitably causes market volatility because of the possibility of escalation. President Trump stated that the Shayrat airfield was used as the base for Syrian chemical weapons attacks that killed more than eighty people. Russian President Putin condemned the airstrikes as “an act of aggression.”
Also this week, the Federal Open Market Committee (FOMC) released the detailed minutes of their March meeting, during which the members had agreed to institute an interest rate hike. Going into the March meeting, banks anticipated three rate hikes in 2017. However, economists are now theorizing that the rate hikes will be coming at a slower pace, since the Fed may start shrinking its balance sheet gradually toward the end of the year.