Markets moved confidently again for a third straight day as WTI gained 51 cents a barrel to reach $54.41 and its European counterpart, Dated Brent, advanced 96 cents to end the trading session at $64.57 a barrel. Refined products too posted solid gains with distillates picking up more than 3 cents a gallon and gasoline attaining a better than 4 cent advantage by the closing bell. Much of the increase was in connection to positive news and vibes emanating from the ongoing U.S. – China trade talks with featured comments by Treasury Secretary Mnuchin labeling the talks “productive”. Petroleum products also got some added lift from refiner PBF’s announcement that two of its northeast refineries were going through seasonal maintenance, adding to an already low utilization outlook for PADD 1, which now sits below 70%.
This morning’s traders must also consider more recent developments such as the disruption of a major offshore oil producing field in Saudi Arabia after a main power line was severed by a ship’s anchor, potentially affecting a million barrels a day of heavier oil. Not only is the oilfield the world’s largest, but it comes at a time of tightening heavy crude output given the turmoil in Venezuela and Canada’s move in December to curtail nearly 10% of its similar grade oil.
For motorists, the tell-tale signs of a price correction at the pumps appear to be unfolding gradually. According to GasBuddy’s Live Ticking Average At $2.309 a gallon, fuel now costs a cent more than both yesterday and last week and now 6.1 cents higher than last month, despite being 23.5 cents below average prices on this very day last year. But diesel has yet to respond having not moved from yesterday’s 2.917 a gallon, which is a cent cheaper than last week 1.5 cents less than last month and 6.1 cents below its price on February 15, 2018. Inevitably, these lows will not last and an upwards correction for distillates generally, should be expected for consumer and commercial users beginning next week.
The week is therefore likely to see a strong gain with four out of five days of positive numbers. With crude flirting with its highest prices in trades of the new year and approaching values not seen since November 19, the stage appears set for the beginning of a rally that could see WTI march to $58 a barrel with Brent making moves to $67 a barrel should there be more optimism over U.S.-China trade and a more bullish EIA weekly petroleum stockpile report expected next Thursday due to the federal government holiday this Monday.