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Energy View: Wednesday February 13

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Despite a downward revision in 2019 global oil demand by OPEC and the EIA, energy commodity prices posted modest gains yesterday with WTI picking up 69 cents a barrel to $53.10 and Dated Brent advancing 91 cents to $62.42. Although distillates moved forward a cent and a half, gasoline barely moved as traders awaited today’s weekly EIA inventory report. According to the API, the results today may provide more upward momentum as they expect a small 1 million-barrel draw in crude, which is counter to the 2.7 m/b build consensus estimate with gasoline seeing a slight build and a larger-than-expected draw for distillates.

The EIA’s estimate that the U.S. produced 12 million barrels of crude per day in January, up 90,000 from the previous month, and that the country will average 12.4 m b/d in 2019 and 13.2 m b/d in 2020, did not go unnoticed by OPEC, which noted the advances present headwinds to avoiding a global glut in oil supplies. Still, markets appear moved by OPEC’s declaration that it managed to draw down 800,000 barrels a day of oil production in January and concerns over a tightening of supply caused by uncertainty over the crisis in Venezuela and expiration of waivers for Iranian oil importers gets top billing in the minds of traders.

For drivers, weeks of indecisive moves on the fuels markets has kept prices at the pumps range-bound between $2.25 to $2.30 a gallon with only retail gas bar margins accounting for any major shift in prices, both up or down. According to GasBuddy’s Live Ticking Average, the cost to fill up today stands at $2.285 a gallon, down nearly a cent from last week but 4 cents above last month’s average on this day of $2.245 a gallon. In contrast to last year on this day, gas prices are 27.5 cents cheaper and a saving that is more impressive than diesel, which at $2.916 a gallon is only 7.2 cents less than on February 13, 2018.

With morning bids on the petroleum commodities markets indicating slightly higher this morning, with diesel leading the way, the session is likely to end in a net gain especially if today’s regular weekly energy report by the EIA confirms the API’s assessment of a more bullish reveal. With traders leaning towards more bullish bets, seeing legitimacy to the moves by OPEC to clamp down hard on output and formalizing their union with Russia, the mood is decidedly upbeat and values are set to rise accordingly.

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.