Energy markets roared back to life yesterday with the crudes posting strong gains as WTI rose $1.30 a barrel to settle at $72.08, while Dated Brent picked up $2.40 to achieve $81.20 on a day that took full measure of OPEC unwillingness or inability to raise production quotas to offset soon-to-be fully sanctioned Iranian oil. The hike also represented Brent’s highest values since November 24, 2014. The prospect of a million barrels a day vanishing from global markets continues to support oil futures, although the day looks positively less enthusiastic than yesterday.
For refined products, Monday’s settlement was a boon for gasoline which gained over three and a half cents while diesel rose a solid six cents to reach values not seen since Wednesday, May 23rd. The spillover into this morning appears to be in play albeit more conservatively as renewed concerns over the looming and expanding trade war between the world’s two trading giants, the U.S. and China gains more attention, despite confirmation that both Libya and Venezuela will see sustained decreases in oil output for the month ahead. Consequently, gasoline is trading up under a penny, while diesel is capturing more ground up nearly 1.5 cents a gallon in early morning market activity.
Although the effects of the recent rises in energy commodities’ value has not shown up at the pumps across the country, for now, there’s a strong possibility gas prices could lurch ahead over the next week especially if, as expected, the EIA shows a draw in tomorrow’s weekly EIA report. For now, pump prices remain stuck in the $2.84 a gallon range according to the GasBuddy Live Ticking Average. That leaves prices pretty much where they’ve been over the last week and indeed the month or so, but 28 cents a liter above same day prices this time last year. Diesel also remains constant at about $3.18 a gallon or 44 cents a gallon higher than on September 25, 2017.
If markets can find solace from the U.S.-South Korea trade deal today and the API numbers this afternoon, supportive of a bullish EIA consensus on a draw in petroleum inventories to be revealed tomorrow, look to crude oil gaining further ground with refined products tagging along for a net gain on the day. Diesel, in particular, is to be closely watched as is the re-emerging spread between WTI and Brent oil.