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Energy View: Thursday February 28

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Commodity markets made significant headway yesterday after the EIA’s Weekly Petroleum Status Report revealed a surprise draw of 8.2 million barrels and refined products saw similar decreases that helped propel markets overall. As a result, WTI gained $1.44 a barrel to $56.94 and Dated Brent picked up $1.18 to end the session at $66.39, while gasoline zoomed ahead over 5 cents while diesel rose 2.3 cents on the euphoric news.

A scan of today’s energy-related news that may be taken into consideration are the early end to U.S. – North Korea talks over sanction and denuclearization, a decline in Chinese manufacturing and a review of yesterday’s EIA data which on second look showed that while U.S. refinery utilization rose to 87.1%, inventories fell 1.9 million barrels as petroleum demand rose by 2.1% compared to last year. Even the EIA’s Short-Term Energy Outlook this morning, suggests that regardless of output cutbacks from Saudi Arabia, Libya, Venezuela and Canada, global oil production will outstrip demand in 2020.

Despite the uncertain outcomes of geopolitical events, refined products and WTI continue to show modest upwards momentum today as the early year continues to defy precedence with gradual increases in valuations. It also explains why the price at the pumps is now charging ahead with noticeable hikes in the past fortnight across the country.

According to GasBuddy’s Live Ticking Average, the cost to fill up with gasoline now stands at $2.427 a gallon, up 2.6 cents compared to last week and 16.1 cents in contrast to last month. Given the price at the pumps this time last year stood at $2.545 a gallon, the gap of 11.8 cents continues to dwindle. On the distillates side of the barrel, diesel is selling for an average of $2.989 a gallon, up 3.8 cents a gallon from last week and 6.4 cents higher than a month ago, while same-day prices this day last year was 3.5 cents cheaper.

Conflicting and loosely relevant news reports are likely to keep enthusiastic bets to the sidelines as the last day of the month is an opportunity for a more studied consideration of the factors and fundamentals in appraising the balance of supply as the early days of pre-summer driving season comes into focus. As such, the day ahead isn’t likely to see much change in current petroleum price valuations with slight moves to both the upside and downside across the energy spectrum.

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.