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Energy View: Tuesday January 15


Markets cashed in some value yesterday as crude and energy futures fell for the second day in a row with WTI falling $1.08 to $50.51 a barrel and its European counterpart, Dated Brent, giving back $1.48 to end the trading session below the $60 benchmark at $58.99. The refined side of the ledger wasn’t any better, with gasoline dropping nearly four cents a gallon while diesel pared losses but ended down nearly 3 cents a gallon. Concern over poor economic data coming from several corners including China and Germany had some traders hitting the “sell” button, renewing their bearish outlook seen last month.

While two trading days do not make a trend, indications that the U.S. is unlikely to extend its waivers to Iranian oil importers beyond the six-month grace period that ends in April, has markets moving more positively to the upside in early morning trades. Stimulus in the form of tax cuts in China may also be giving markets cause for cautious optimism, but on a day that will see a dilemma unfold in Britain over Brexit and admission in some corners of a likely global slowdown, will serve as a check on today’s overall gains.

The end of energy’s rapid rise may also continue to yield unexpected savings for motorists across America. At $2.226 a gallon, gas prices are fractionally lower than last week, 14.1 cents a gallon lower than last month and 29.5 cents below last year’s average according to GasBuddy’s Live Ticking Average. Indeed, diesel, which leads the price parade for much of 2018, now stands at a modest $2.932 a gallon, down a whopping 36.9 cents a gallon from its October 12 high of $3.301 and tied with the price paid on this very day in 2018.

With momentum carrying traders to a winning day ahead, only a negative outcome to today’s British Parliamentary vote on Brexit could cause a reversal in the overall upwards movement. An anticipated API report this afternoon could also give a glimpse into what could be expected in tomorrow’s EIA Weekly petroleum inventory report which many expect to support the bulls, especially on the crude front. To note as well will also be the effect of the recent move by the Mexican government to import more fuel in response to theft from fuel pipelines which have caused the country an estimated loss of $3 billion last year. The move could help support a draw in gasoline stocks, which have seen them rise in recent weeks.

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 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.