Energy markets have found traction this morning after slight losses yesterday for WTI and refined products. This morning, WTI is up 90 cents a barrel nearing the $70 threshold and Dated Brent has gained more than a buck to push up to $79.10 a barrel with refined products like gasoline up 3 cents a gallon and diesel posting an even greater gain of over 3.5 cents.
The increases, thus far, signals traders are shaking off concerns over increased trade tensions between the U.S. and China which could ultimately have serious implications for crude oil demand with escalation and retaliation. Renewed worries over the looming November 4, U.S. sanctions on Iranian oil exports and the continued deterioration of Venezuela’s ability to produce and ship oil has much to do with this morning’s rally. As well, increased refinery turnarounds, delayed by higher than expected demand this past summer leaves some to believe that fuel supplies could be crimped despite the seasonal drop in demand.
For drivers, pump prices continue to remain constant holding at the $2.84 a gallon level according to GasBuddy’s Live Ticking Average. That median price is virtually unchanged from last week and indeed last month, but still 24 cents a gallon above prices motorists paid on this day last year. Turning to diesel, at $3.18 a gallon, or 48 cents higher than last year, prices have remained remarkably steady over the last month, a sign that supply and demand remain balance with no major events precipitating any volatile swings consumers have become accustomed to when it came to pump prices across the country.
Geopolitical tensions appear to be a part of the rally today with a Russian jet having been apparently downed by Israeli missile(s) as well as comment overnight from Saudi Arabia that it is comfortable with current international oil prices and talk by both Russia and Saudi Arabia that a 1 million barrel increase in oil production is in the offing; an increase that won’t make up for sanctioned Iranian oil that could leave a 1.5 million barrel a day shortfall in global supplies.
While pump prices remain constant, markets do not and the day ahead could prove a win for energy commodities, even before the API publishes its big reveal of tomorrow’s EIA weekly petroleum inventory data. Look for gains for the day carrying into tomorrow should, as expected, oil and fuel inventories fall, despite seasonal refinery turnarounds.