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Energy View: Tuesday April 9


Markets advanced confidently on Monday after clashes in Libya’s capital, Tripoli intensified, threatening the country’s valued light sweet oil which cannot be easily replaced. The effect of declining oil output from Venezuela, Libya and OPEC’s tightening of production gave traders reason to provide a noted lift to the petroleum energy price complex that saw WTI rise 1.4% to 64.40 a barrel while Dated Brent added 76 cents to its value, allowing it to retrace the $70 threshold and at $71.10 a barrel, retake prices not seen since November 7. Not to be outdone, refined products, too, caught the wave of enthusiasm, allowing gasoline to rise nearly 2 cents a gallon, while distillates achieved the same.

The morning saw initial builds on yesterday and Friday’s advances, however another front on trade disputes has been touched off today and this time concerning trade tensions and accusations of unfair subsidies by the U.S. Administration over European support for Airbus, an accusation that according to Europeans runs both ways with the U.S. doing the same for Boeing, a long-standing matter before the WTO. Little wonder that with perceived trade imbalances by the Administration that ranges from China to Mexico to Canada, the addition of Europe has some energy traders taking a more cautionary approach today.

For drivers pumping more to get less seems to be a general occurrence as average gas prices are now up over 50 cents a gallon since the beginning of the year. According to GasBuddy’s Live Ticking Average, gas prices are now holding at $2.758 a gallon, up 4.6 cents from last week, up 26.9 cents compared to last month and now 10 cents a gallon higher than last year. For most drivers using 50 gallons a month, the cost of filling up is now $25 more than in January and likely to rise in the weeks leading up to the official launch of summer season driving on the Memorial Day long weekend in the third week of May.

Judging by the early morning trades and expectations for an odd build in crude supplies in tomorrow’s weekly EIA petroleum stockpile report, the day isn’t likely to emerge with any significant gains except for gasoline. The pause may well reflect the need for traders to consider more data on the fundamentals as well as the clarification on intentions by the U.S. to slap $11 billion dollars in trade tariffs on Europe over Airbus. Taken as whole and failing resolution, with many other trade entanglements, the general effect of threatening and imposing tariffs points to possible clues to the prospects of a global economic slowdown.

Senior Petroleum Analyst, Canada

Dan is a skilled and noted bilingual (French and English) consumer advocate specializing in energy and current affairs. Known as Canada's “Gas Guru,” he founded to better help motorists anticipate the price of gasoline in advance across Canada. He has over three decades of experience in the petroleum industry, as a parliamentarian and an analyst.