Energy markets continued to give up ground yesterday, turning in a lackluster performance Monday with ongoing concern that trade negotiations between the U.S. and China show no sign of promise, even with President Trump’s stated desire to meet with Chinese President Xi over the crucial matter to avert an all-out trade standoff. Not surprisingly, WTI fell 31 cents a barrel to $52.41, while Dated Brent gave up 59 cents to end the trading session at $61.51, with both benchmarks hitting their lowest values in February so far. Likewise, the liquids could not hang on and continued to fall from their Friday levels by around two cents, and once again on renewed worry over possible slumping fuel demand.
In contrast to the pessimism of the past two trading days, the morning shows a redirect in trader’s attitudes with the early session turning in gains for the crude and petroleum indexes. Spurred by news that Saudi Arabia had managed to trim its oil output by 400,000 barrels a day and was set to draw that down another 100,000 to 9.8 m b/d in March, sparked a rebound that was also re-considering the long-forgotten issue that waivers given to importers of Iranian crude were set to expire at the end of the same month, setting in motion a plausible tightening of global crude supplies. Adding to the upward trend this morning is a confluence of factors such as several refinery setbacks in the U.S. and a strike at Europe’s Port of Antwerp operations, which make up a vital part of the cross-Atlantic petroleum trade network. The disruptions as a whole are seen as another catalyst behind the strengthening numbers on energy markets.
For drivers, weeks of indecisive moves on the markets has turned into relatively stable prices at the pumps with slight increases over the last week or so. According to GasBuddy’s Live Ticking Average, the cost to fill up now sits at $2.287 a gallon half a cent compared to last week, but up 3.2 cents compared to last month. Still, pump prices are significantly less than last year when they were 28 cents a gallon higher and unlike diesel, which sits today at $2.92 a gallon or 6.8 cents less than last year, gasoline users are the big winners considering prices on February 12, 2018.
With the petroleum market surging ahead, as the crudes are already up over a dollar a barrel and refined products over 3 cents a gallon, the day ahead is almost inevitably going to end in the win column and could carry over in to Wednesday’s trades should tomorrow’s weekly EIA data report show a less than expected build in inventories according to the overall consensus.