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Energy View: Thursday December 20

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The mood on energy markets yesterday was relatively positive with gains across the crude and refined fields with oil edging up as much as $1.70 a barrel before the FED announced a fourth interest rate hike for 2018. The much expected but controversial move pared the advances as WTI managed only a 96 cent a barrel gain to $47.24 while Dated Brent gave up nearly half its earlier gains, managing a similar 96 cent win to end the trading session at $57.24 a barrel. For their part, refined products saw a 3.8 cent a gallon advance for gasoline with diesel managing a more impressive 5.2 cent a gallon rebound, based on the EIAs bullish inventory report which showed distillate stockpiles decreased 4.2 million barrels on the week. In what was an otherwise uneventful data display that pointed to a 1.8-million-barrel increase in gasoline stocks and a fractional half million-barrel decrease in oil inventories, distillates led the price parade.

The full weight of the FED rate increase is being felt this morning as energy markets appear to be collateral damage to the larger losses on the equities markets. The crudes are giving back $1.70 to $1.90 a barrel while the liquids are shedding over 3 cents a gallon in response to the late announcement yesterday on the central bank interest rate move. The overriding concern of global oversupply of crude and fears of receding demand with an anticipated slowdown in world economic forecasts are also playing a role in pessimistic pre-Christmas trades that will send WTI back to values last seen this low on August 30, 2017.

But the grim news for producers is music to the ears of drivers who continue to save at the pumps. According to the GasBuddy Live Ticking Average, median pump prices now register $2.37 a gallon, down 2.5 cents from last week and 23 cents compared to prices last month. The price for a fill up will now be 6.4 cents a gallon cheaper than last year on this date which compares well against diesel prices, which at $3.06 a gallon is still 22.9 cents more expensive year-over-year.

The futures markets are being broadsided by the equities trades and given the overall concern that the latest FED move will slow down economic momentum, traders are taking a dim view of petroleum pricing in general. Look therefore to crude and fuel values to continue their descent to levels of trades in the late summer of 2017 before Hurricane Harvey began to spark a rally.

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.