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Energy View: Friday December 14

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Traders allowed energy commodities to rise yesterday after a glum trading day on Wednesday, bolstered by news of proposed Saudi oil export cuts to the U.S. which would represent 30-year lows in U.S. imports from the Kingdom at 582,000 barrels. Under the 1.2 million barrel cut OPEC agreed to last week, many believe emphasis will be on Asian and European markets rather than supplying the American oil juggernaut. Not surprisingly, WTI gained $1.43 a barrel to end the trading session at $52.58 while the European counterpart benchmark Dated Brent regained $1.30 to reach $61.45 a barrel. Refined markets, too, were on the mend with gasoline picking up over 5 cents a gallon with distillates not far behind with a near 4 cent gain. The temporary shutdown of the PNW’s Olympic pipeline was a standout event that saw markets there add nearly 20 cents a gallon for fuel.

Markets this morning seem to be taking a break from the resurgence in yesterday’s commodity pricing with the entire petroleum price complex firmly in neutral, suggesting a mixed day ahead. However, news of a slowing Chinese economy in conflict with prospects that U.S refiners may be short critical heavy oil from Saudi Arabia and Canadian supplies rising 70% in value since Alberta implement a 325,000 barrel a day cutback in production, are dueling bullish factors.

In the meantime, prices at the pumps continue their gentle decline in the wake of nearly two months of losses for the crude values, with most drivers continuing to benefit from the unexpected collapse. According to the GasBuddy Live Ticking Average, median prices stand at $2.395 a gallon, 3.4 cents lower than last week, 27.6 below last month’s values and now 5.1 cents less than a year ago today. For its part diesel is also falling gently, but not as decisively as gasoline. At $3.095, the key transportation and equipment fuel still stands 26 cents a gallon higher than last year and with colder weather ahead, could see that difference wider.

Barring any unforeseen bearish news the market today is heading towards a neutral finish, but allowing a noted, but small, overall gain for energy markets on the week and enough to register a second week of improvements.

As markets prepare for the Christmas and New Year’s holidays beginning at the end of next week, big moves and certainty in futures trades won’t likely move decisively until after the first full week of session trades in January. A short-term outlook for the balance of the year will likely see the overall market move tepidly over the next few weeks and well into January 2019.

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 tomorrowsgaspricetoday.com 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.