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Energy View: Friday February 22

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A weekly energy report by the EIA proved estimates on inventories were in line with consensus and that the API guess was more optimistic than thought as crude inventories rose 3.7 million barrels, even though gasoline and diesel stockpiles were drawn down by 1.5 million barrels on the previous week. But the bigger consideration for markets is and will continue to be the messages emanating from trade talks between the U.S. and China, which appear to be bolstering the energy commodities this morning.

News that U.S. President Trump and Chinese trade chief Liu Ho are planning to meet has sent markets rallying on the heels of news that China intends to increase its purchase of American agricultural products by $30 million for the year ahead. Despite the apparent build in U.S. crude inventories yesterday and the EIA’s forecast that domestic oil output will reach 12.4 million barrels a day this year, markets are looking to the bullish side of the coin on trade talk developments and OPEC’s success in throttling back global crude supplies.

Drivers across the country are taking note of higher pump prices this week. After a month of higher prices on petroleum markets, the increases are finally making way to gas stations with some noticeable increases. According to GasBuddy’s Live Ticking Average, the cost to fill up now stands at $240 a gallon, up 9.4 cents since last week and 12.2 cents above prices last month. And while pump prices are 12.4 cents lower than on this same date last year, the gap in year-over-year is narrowing. Diesel prices, too, are strengthening and at an average this morning of $2.962 a gallon have overtaken last year’s prices and are at their highest costs since January 8. There is now little doubt that the rally predicted by GasBuddy’s 2019 Fuel Outlook is now unfolding with higher prices on their way.

Expectations for the trading day are once again to the upside with WTI up over 35 cents a barrel to $57.35 even though refined products are likely to trade at a loss by day’s end. Barring any major bearish news reports, the market will finish yet another week of overall gains as market watchers provide a boost to commodities based on optimism that trade talks with China will yield a positive outcome.

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.