Futures markets rose, stalled and receded in the afternoon to end yesterday’s trading session with an overall loss after U.S. President Trump noted he wanted “a very big deal” to emerge from talks between the U.S. and China aimed at averting an all-out trade war between the world’s biggest economies. Traders took this to mean the outcome was less than favorable and reversed course on positions, leaving WTI with a 44 cent loss to $53.79 a barrel while Dated Brent traded back 81 cents to land at $60.84. Refined products didn’t fare any better giving back a little more than a cent, following the crudes.
The slight decline yesterday appears to have ended with the petroleum pricing complex firmly in neutral based on bullish developments in light of the restrictions on Venezuelan oil. Reports that U.S. Gulf Coast refiners are cutting back runs and that Venezuelan owned CITGO may file for bankruptcy is giving tangible evidence of an emerging tightness in oil and fuel supplies. Of note, too, is that for the 100th month in a row, jobless claims in America fell and with it no major growth in wages. The significance of this milestone is likely to be seen as supportive of energy prices and the indication of no real wage growth could confirm for the FED evidence that another rate hike may not be necessary.
For drivers, the variability of markets prices, seemingly daily, has had little impact on pump prices. According to GasBuddy’s Live Ticking Average, the cost to fill up has hardly moved this week remaining at $2.276 a gallon, while posting a 3.2 cent premium over last month’s prices, but still 32.8 cents cheaper than on this same day last year. For diesel, which currently holds at $2.924 a gallon, the cost to fill up is nearly 6 cents less than at the beginning of the year and 7.6 cents below the price on this same day in 2018.
Expectations are that with a strong jobs report today and more positive vibes stemming from trade talks between the U.S. and China, colder weather and the developing tightening of supplies given sanctions placed on Venezuela, traders are likely to revisit Wednesday highs. The final week of January and first trading days of February are on track to seeing the week end on the plus side of the ledger, setting in motion further gradual increases in market valuations in petroleum products next week.