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Energy View: Tuesday February 5

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Traders cashed in last week’s market gains, delivering a 70 cent a barrel loss for WTI and a smaller 24 cent drop for Dated Brent on a day which also saw gasoline nudge up a fraction of a cent while diesel pared an equally minuscule amount. The softening was said to be in response to a fall in U.S. made goods in November according to government data, as well as reports that the all-important hub for crude inventories at Cushing, Oklahoma rose over 900,000 barrels in the last week of January. Countering this was, of course, the ongoing deteriorating situation in Venezuela, which now faces the prospect of the European Union replication U.S. actions aimed at restricting oil and financial transactions between other countries and Venezuela’s current leadership. Compounding concerns is the reality that 7 million barrels of Venezuelan crude are now estimated to be stranded at sea as uncertainty as to who the payment is to be made to continues to linger.

This evening, traders will consider both the API’s take on what tomorrow’s weekly EIA petroleum data report will yield and whether it will confirm the bearish expectations in the energy markets or offer a second week of optimistic information. Attention will also be given to the President’s State of the Union Address and possible hints for at least the equities markets.

For drivers, other than movements by gas bars to restore eroded retail margins, the price at the pumps continues to be a bright spot for consumers. According to GasBuddy’s Live Ticking Average, at $2.277 a gallon, the cost to fill up is virtually unchanged from last weekend although 3.6 cents a gallon higher than last month, still costs 33 cents less a gallon to purchase than last year at this time. With diesel holding at $2.919, the vital transportation fuel is down 5.2 cents compared to last month and 8 cents below what it cost on February 5, 2018.

Expectation for the day ahead will be more of a wait-and-see take approach with traders awaiting more solid news on domestic and external economic information to offer bets. With refined products trading down a little more than a cent a gallon and both WTI and Brent off nearly half a dollar a barrel, look to these valuations firming up in the afternoon with tomorrow’s EIA data giving strong directional hints for the balance of the week.

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.