Back to Analyst

Energy View: Tuesday November 13

|

Energy commodities resumed their downhill march yesterday in what was a decisive shift to the negative in afternoon trading which saw WTI give up 26 cents to end the session at $59.93 a barrel while its European counterpart, Brent shed a fractional 6 cents to hold above $70 at $70.12. Earlier trading yesterday had oil up a dollar a barrel with gasoline pointing to a 2 cent gain, until a weaker equities market gave way in the commodities trades, bolstered once again in no small part by President Trump tweeting his view that OPEC should continue pumping oil to bring down prices.

News from OPEC this morning suggests that with slowing global activity, especially in the Middle East and China, demand for hydrocarbons are likely to fall leaving 2019 with a glut of unwanted crude. The take seems to be spooking markets for crude this morning with both Brent and WTI down over $1 a barrel with the global benchmark know firmly below $69 while he North American standard bearer is under $59. Other noteworthy events to be given due consideration is the restart of several laid up units at BP’s 430k per day Whiting plant, which will inevitably lead to lower Midwest spot prices for fuel, while giving a substantial boost to Canada’s heavy oil signature blend, WCS. Other notables will be focussed on thinning refining margins which could set the stage for some refiners to curtail production, despite the continued strong margins for diesel. As an aside, forecast for a colder winter season and even a glance at a late hurricane season disturbance in the Atlantic could gain some interest later in the week.

For drivers, turmoil on the energy markets is a good thing. According to GasBuddy’s Live Ticking Average, pump prices across America now register $2.68 a gallon, virtually unchanged from the weekend, but 4.8 cents cheaper than last week and down a whopping 21.2 cents compared to last month. The gap between the year-over-year pump prices have narrowed as well, with median prices today sitting at only 11.3 cents a gallon above what we paid compared to last year on this day. For diesel the story isn’t as encouraging as drivers relying on gasoline. At $3.248 a gallon, diesel prices are still 41.9 cents higher than last year, even though they’ve moderated 5 cents a gallon in the past month.

Leaving aside OPEC’s prognostications for 2019 demand, the current sentiment is clearly bearish with most traders considering a crude oil glut that won’t be drawn down with non OPEC nations like the U.S. and Russia continuing to hike output. Absent a sudden geopolitical event today or for the week ahead, the crude price complex has seemingly, more room to fall.

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.