Traders surrendered some of their positions yesterday with the crude complex shedding under 25 cents a barrel with WTI ending the day down 24 cents to $52.07 and Dated Brent coughing up 14 cents to end the trading session at $61.18. The downward move wasn’t accompanied by the refined products which saw a modest 1.8 cents a gallon gain for gasoline even though diesel fell a little over a cent. Further evidence that markets are taking a wait-and-see approach was the fact that the losses were modest and this morning, enthusiasm has the markets trading to the upside for both oil and liquids.
Yesterday, cold water was poured on speculation that U.S. Treasury Secretary Mnuchin had mused about the possibility of the U.S. releasing some tariffs on Chinese exports. The clarification caused markets, both equities and petroleum, to take back their initial enthusiasm late into the day yesterday. Still, the Administration’s apparent concern for the effects of an economic slowdown in China, suggests the U.S. is paying closer attention to developments there that could adversely impact the U.S. economy. The effect this morning seems to be an echo of that promising news, even though no decisions are likely anytime soon.
For drivers, the apparent recent lateral move of the fuels markets continues to favor consumers with pump prices remaining stable and at low prices not seen since June 17, 2017. According to GasBuddy’s Live Ticking Average, while the cost of a fill-up is the same as yesterday at $2.249, they are nevertheless a penny less than last week, 12.8 cents a gallon less than last month and 30.1 cents below prices this day last year. Diesel too is edging down and now stands at $2.929 a gallon, 31 cents lower than its October 13, 2018 high, and now 2.1 cents below the cost for a fill-up last January 18.
With little in the way of trend inducing headlines, traders appear content to allow the markets to regain some of their Thursday losses, which should be enough to provide a third consecutive week of gains, albeit modest. The sweet spot for drivers is likely to continue for a fourth week in which crude advances gradually, but gasoline decoupled from the advances, leaving a continued range bound minimal movement for gasoline. Short of a cold snap which could cause a run on heating oil, expectations for next week are for a carbon copy performance of slight gains by week’s end.