The oil market bears were still milling about yesterday allowing WTI crude to manage only a 45 cent a gallon increase to $65.46 and a 67 cent concession to Brent allowing it to settle at $71.43. Meanwhile, gasoline struggled to gain a penny on the day to $2.047 a gallon while diesel rose 1.4 cents to $2.104 a gallon.
As with the past several days, trade tensions, lingering angst over currency devaluation, lower cyclical Chinese and Indian demand, and even acknowledgment of refiners entering the shoulder season in anticipation of the transition to fall blends dogged any real attempt at a rally in energy prices.
Despite October contracts for gasoline selling a dime lower than the current September contracts, refined products are up this morning 2 cents a gallon and nearly 3 cents for diesel. Oil prices appear to be attempting a rally as WTI moves up 75 cents a gallon and Brent gaining over $1. However, as seen all too often these past several weeks, pre-noon hour trades have little in common with afternoon market sentiment and any early assumptions about where the trading day ends can often lead to disappointment.
According to GasBuddy’s median price for fuel, average pump prices are still holding just below $2.86 a gallon representing no real change compared to last week’s prices, nor even last month’s average values. Nevertheless, in the pre-hurricane season that came to define higher pump prices at the beginning of September 2017, this year is still 53 cents a gallon dearer than last year at this time. For its part, diesel continues the price parade holding at $3.15 a gallon or 62 above the same day last year, but will likely rise as fall utilization begins in earnest over the next few weeks.
While no one these days has a crystal ball that can definitely point with any accuracy to what we’ll be paying in the weeks ahead, much less the day’s end, short of trade threats and currency disruptions which could sideline demand, the fundamentals for energy products looks strong and supportive of current prices. The blockade of Iranian oil via the U.S. re-imposition of trade sanctions is an emerging threat to the global balance of oil supplies which have so far escaped real attention as markets consider and react to more immediate reports to form price intentions. Longer term, energy commodity prices may soon emerge from their confusion and reflect unimpeded global demand and supply challenges.