Markets behaved unenthusiastically yesterday with crude surrendering several cents for both WTI and Dated Brent, sending them to $70.80 and $78.70 a barrel, respectively. The dour mood was likely connected to President Trump’s reminder by twitter to Middle East countries, that they shouldn’t take U.S. military support for granted and that the “OPEC monopoly must get prices down now!” A likely shot across Saudi Arabia’s bow over comments it made earlier this week that it was comfortable with $80 oil in advance of OPEC’s meeting this weekend in Algeria. Naturally, refined products also fell with gasoline losing 2/10s of a cent a gallon while diesel shed 2.19 cents after the inventory build reported by the EIA on Wednesday.
The morning sees all of yesterday’s losses recovered, and then some, with WTI up 60 cents a barrel to scrape the $71 barrier again and Brent up more impressively to within 40 cents of the $80 threshold. Gasoline and diesel are posting strong increases, north of 2 cents a gallon in what is likely to be a day of gains ahead of the weekend, capping a week that will show liquids improving on their values, overall.
With refiners having a banner year in gasoline production and work towards ensuring the replenishing of adequate diesel supplies in advance of the seasonal demand and draw, there is a likelihood that the delayed maintenance most refiners undertake at the end of summer could prove longer and deeper in order to prevent a glut in refined supplies, which at 234 million barrels, according to the EIA, in the case of gasoline, stands well above the 10 year average of 215 million barrels. Short of growing exports, gasoline prices may soon be challenged to the downside in favor of drivers.
According to GasBuddy’s Live Ticking Average, median gas prices are up slightly a penny from the previous day to just under $2.86 a gallon, similar to last week but now up 3 cents compared to last month and a full 28 a gallon over same day prices in 2017. Diesel, which on the markets continues to tower over gasoline now stands at $ 3.19 a gallon or 48 cents above last year’s average price for September 21, 2017
Though traders may react variably throughout the trading session, the broad momentum displayed in early morning activity points to modest gains on the day with geopolitical matters taking center stage along with global crude oil fundamentals. All eyes and ears will be paying special attention to how OPEC plans to divide the 1.5 million barrel increase in production it promised, and whether or not this will be enough to fill and replace lost Iranian, Venezuelan and Libyan barrels.