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Energy View: Wednesday October 17

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Oil and refined products rallied on the markets yesterday in concert with stocks and bonds to restore some of last week’s losses with oil advancing 14 cents for WTI to $78.92 a barrel while Brent jumped 63 cents to end the day at $81.41. Not to be outdone gasoline grabbed over 3 cents a gallon while diesel earned near a cent and a half on the eve of a surprise report by the API of a 2.13 million barrel drop in crude inventories with diesel falling a modest 246,000 barrels and gasoline plummeting 3.42 million barrels last week. If true and anywhere near what the EIA weekly petroleum report later this morning reveals, market prices could take a u-turn from early declines once oil options have expired.

More grist for the mill is the approaching November 4th U.S. embargo on Iran and news yesterday that resolution on shared oil wells between Kuwait and Saudi Arabia seems at an impasse, a critical development as the wells were seen as the great hope of backfilling a decline in Iranian oil output and stabilizing rising global demand ahead of the oil embargo deadline. As well, a look at the jobs figures in the country and total jobs offerings could also serve as a catalyst for stronger energy commodities prices, once all factors are carefully considered.

For drivers across the country, gas prices yesterday moderated somewhat, falling about half a cent to $2.875 a gallon according to GasBuddy’s Live Ticking Average, but signs point to an impending increase as may regions are set to experience a degree of price cycling with stations restoring lost retail margins. Still, gas prices at juncture are down almost 4 cents a gallon compared to last week, but up 3 cents compared to last month and nearly 43 cents above prices this time last year. As for diesel, the story remains one of big spreads in contrast to last year on this day when a gallon of the distillate cost an average of $2.72 a gallon, unlike today where it’s valued at about $3.30.

For the trading day ahead, all valuation will be based on the 10:30 am big reveal by the EIS’s Weekly Petroleum Status Report. Should the API’s consensus crushing numbers be proven correct, expectations would be for another day of rising values for both the crude indexes as well as the refined products markets.

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.