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Energy View: Thursday October 11

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The petroleum commodities complex sold off yesterday following the record drop in equities markets on angst over growing trade concerns and with the exception of Pacific North West gasoline and diesel production challenges with a reduction in natural gas feedstock to run refineries there, both WTI and Dated Brent shed nearly $2 a barrel to finish at $73.17 and $83.09, respectively.

Trading this morning revolves around continued downward pressure on the stock markets, growing unease about the FED raising interest rates, including tweets by U.S. President Trump, decrying the moves, overarching concerns over the growing trade dispute between the U.S. and China as well as an early peek by the API at what could be a sizable build of some 9.75 million barrels in oil stocks his past week. The downdraft appears to explain early morning losses of over a dollar a barrel for WTI and nearly a dollar and a half for Brent, while gasoline continues its precipitous descent of over 4 cents a gallon followed by diesel which is in the red this morning by nearly the same amount.

While effects of Hurricane Michael are still being felt, early assessments of the damage to Gulf of Mexico platforms, shuttered in advance of the storm and representing over 40% of total oil production in the area, will be undertaken to determine the extent of the damage and their implications for an early resumption of production.

For drivers, the past couple of weeks have seen steadily rising prices at the pumps. According to the GasBuddy Live Ticking Average, median prices now fetch over $2.91 a gallon, on par with last week’s values but up 7.5 cents a gallon compared to last month and an eye-popping 44 cents a gallon above what most paid last year on this day. For diesel, at $3.296 a gallon, prices are touching levels not seen since December 2014 and a full 57 cents a gallon premium over what transport drivers were accustomed to October 11, 2017.

Barring any surprise draws in crude or gasoline inventories, the trading session today is likely to end with steep losses, except for distillates, which could be the lone holdout. With no likely damage to gasoline distribution networks in the U.S. Southeast a growing addition to healthy inventories is going to contribute to further losses and receding pump prices into next week. The PNW market will be closely watched as gasoline futures there are already 53 cents above the merc and likely to hold until the pipeline carrying natural gas feedstocks from central British Columbia to Washington state refineries resumes operations.

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.