Despite the Columbus Day inspired lighter trading yesterday, energy markets had much to consider including a fire at Irving’s St John refinery, a move by the rump administration to increase ethanol content in gasoline, a warning by the IEA that global oil supplies will fall unless OPEC pumps more, risk associated with fast-approaching Hurricane Michael and an IMF forecast that world economic growth will stall given looming and growing trade tensions.
Yesterday, WTI lost a nickel in value chiming in at $74.29 a barrel, while Dated Brent shed 25 cents to end at $83.91 leaving gasoline and diesel struggling to manage sub-penny gains on an otherwise quiet trading day.
This morning the energy complex is showing signs of strength with WTI moving up about 40 cents a barrel and pushing it back towards $75, Brent up nearly 50 cent to $84.50 a barrel while refined products are heading in different direction with diesel up just under a penny a gallon and gasoline down by nearly the same. Unquestionably the big loser on the day and indeed, the last month, has been Canadian oil WCS which is now the world’s cheapest by a long shot at a $25.29 a barrel, a veritable boon for US Midwest and Gulf Coast refiners who can process it by saving $49 a barrel from the WTI benchmark.
For drivers, the last two weeks have proven expensive with gasoline prices resuming values not seen since mid-June. According to GasBuddy’s Live Ticking Average, median costs at the pumps are now just under $2.91 a gallon, up 1 cent from last week, 7 cents higher than a month ago and a commanding 44 cents above what drivers were paying this time last year. For its part diesel too is getting a lot more expensive. At $3.23 a gallon, the fuel which moves the global economy is now 50 cents a gallon higher than on this day in 2017.
For the day ahead, the pace set by early morning trades are likely to continue with crude leading the way as markets attach more weight to a possible global shortage of oil with the advent of the U.S. embargo on Iranian exports. Concerns raised by the International Energy Agency of a million barrel shortfall and the organization’s call for OPEC to up output is adding heft to bets that are positively bullish. Diesel will continue its path towards a gain on the day, but gasoline appears to be the sole victim on the day and will likely wind up with losses on the day as the Irving refinery fire is not seen as affecting Northeast supplies.