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Energy View: Wednesday November 7

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Petroleum energy markets are picking up momentum this morning for the first time in eight sessions on news that yesterday’s U.S. mid-term elections did not yield any undue surprises and the overall assumption that the supply-demand balance of crude markets is stable. After a day that saw West Texas Intermediate (WTI) shed 89 cents in value to $62.21 a barrel and Dated Brent dropping over $1 to $72.13, the day ahead looks remarkably buoyant.

Market losses yesterday can be traced to the EIA’s revision of forecasted average daily oil output increasing from 11.5 million barrels a day to 12.1 m b/d in 2019. More oil means a check on concern about global supply concerns and coupled with the Iran sanctions waivers allowing China to import 360,000 barrels a day from the Islamic Republic, traders were in no mood to see any reason for supporting crude prices generally. Consequently, WTI fell to values not seen since Thursday Match 15, while Brent had to settle for prices it last saw on April 18.

Refined products fared no better with gasoline picking up a fractional loss to $1.714 a gallon while diesel shed nearly a cent to end the trading day at $2.207 for a gallon of the winter favorite fuel.

For motorists, several weeks of declines on the markets is translating savings at the pumps. According to GasBuddy’s Live Ticking Average, with median prices now at $2.728 a gallon, prices are now 5.1 cents cheaper than last week, 18.2 cents lower than a month ago and a narrowed 17.3 cents a gallon above this time last year. Although diesel prices have dropped nearly 2 cents a gallon since last week, at $3.269 a gallon, the all-important transportation and heating fuel still holds a 47.5 cent a gallon premium over what it cost on this same day in 2017.

Early morning moves on the markets point to higher values for the petroleum price complex, led in part by a bullish API prediction of today’s EIA inventory report which, while predicting a big 7.83 million barrel build in crude, pointed to a 1.2 million barrel drop in gasoline stockpiles and a potentially more worrisome 3.64 m b/d decline in distillates, placing inventories below the five year average in advance of the colder weather season. With crude oil up half a dollar a barrel his morning and diesel climbing over 3 cents a gallon, the day is likely to end with gains in products with oil giving back some of its modest morning gains.

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.