Fat Tuesday might well see energy markets continue their gradual recovery from Friday’s sell-off after WTI gained 79 cents yesterday to end the trading session at $56.59 a barrel, while Dated Brent managed a 60 cent advance to land at $65.67. Refined products too followed in the same footsteps upwards picking up nearly a cent for gasoline and over 2 for distillates.
This morning, traders are weighing competing headlines which, on the positive side, shows prospects for a successful trade agreement between the U.S. and China continue to show promise as well as broad measures taken by the Chinese government to stem what may amount to growth there falling to 30-year lows. Those lows and concern that the world’s second-largest economy will only reach 6.5% in 2019 gives many pause that could hold back an oil price breakout that some believe is overdue. Analysts are also keeping an eye on the resumption of oil production at Libya’s largest oilfield, Sharara after three months of rebel occupation. Coupled with OPEC’s over-achievement of oil production cuts and higher than expected U.S. oil demand, markets are this morning moving to the upside with the crudes up 40 cents a barrel and even refined products ticking up almost 2 cents a gallon in the case of gasoline.
Turning to fuel prices, according to GasBuddy’s Live Ticking Average, pump prices haven’t seen much change since yesterday sitting at $2.434 a gallon, up 3.1 cents compared to last week and 14.2 cents higher than last month. The year-over-year gap in price is holding at 9.3 cents, but total average prices are likely to move higher today as many gas stations restore their weekend retail margin discounts. For diesel which has now pierced the $3 a gallon threshold at $3.003 a gallon, the fuel that drives the economy has risen 3.1 cents a gallon in the past week. It now holds an 8.4 cent a gallon premium over its cost compared to last month and sits 5.8 cents higher than on this same day last year.
The much-anticipated API estimate of tomorrow’s EIA weekly inventory report will have many looking for clues on the fundamentals. While consensus appears to confirm a draw in crude and petroleum products, a larger than anticipated number could see prices for energy commodities rise precipitously, even should U.S. production data reach new records. With markets moving slightly higher today, the trading session should yield a modest gain, setting the stage for a possible rally tomorrow.