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Energy View: Friday October 5

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Commodity markets took a beating yesterday as investors did a little profit taking and gave more weight to OPEC’s yet to be fulfilled pledge of backfilling any lost barrels due to enforcement of U.S. trade sanctions on Iran in less than a month. Despite a 1 million barrel increase by them in output, there remains a looming shortfall nevertheless. Many also fell for the expression of concern by Russia’s energy minister that oil prices were too high. Markets may also have simply followed the equities market down and given some thought to treasury yields. In any event, WTI tumbled $2.08 a barrel to end the trading session at $ $74.33, while Dated Brent shed $1.71 to $84.58.

Despite weaker than expected U.S. jobs data announced this morning, attributed to the effects of Hurricane Florence, market traders are nevertheless confidently resuming their bets in crude and refined products, given the non-farm payroll data also points out that unemployment has reached its lowest level since 1969. Most importantly the data also suggest the increase in employment does not suggest an overheated wage gain which would otherwise prompt fears of inflation and provoke a correction in monetary and fiscal policies. Already, WTI is trading up 30 cents a barrel while Brent remains virtually unchanged with both gasoline and diesel rising modestly.

For drivers, the impact of rising crude values is now on full display. According to GasBuddy’s Live Ticking Average, pump prices are on the move, up 1 cent from yesterday, 4 cents over last week and 6 cents compared to prices last month. Year over year, gasoline now commands a near 42 cent a gallon premium and the trend is for that gap to widen. Turning to diesel, at nearly $3.26 a gallon, the vital transportation fuel now holds a near 53 cent premium over last year’s prices and it’s likely to widen that spread over the coming days.

For the day ahead, markets appear to be taking a breather until resumption of trades next week when more data becomes available to contrast the anticipated increase in U.S. oil stockpiles at Cushing, Oklahoma as refineries continue with seasonal maintenance transitions, with the growing number of countries who are looking for alternatives to Iran to be supplied. Look to small gains and losses between oil benchmarks as well as refined products.

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.