WTI oil rallied to rise above $70 a barrel for the first time since July 13, while Brent edged up to just under $75, on concerns that world crude producers might not have the ability to replace U.S.-embargoed Iranian oil. Indications were that India, one of Iran’s largest buyers of oil, was scaling back purchases in advance of American trade sanctions. The news propelled oil and managed to see diesel rise a couple of pennies, but proved uninteresting for gasoline, which was virtually unchanged from Friday’s closing.
In contradictory fashion, markets today seem to be interpreting a 70 thousand barrel a day hike in OPEC oil production for July as bearish news, even though more had been pledged to meet surging global demand and continued declines in Venezuelan output. Consequently, oil is trading 45 cents a barrel lower with gasoline and diesel trading over a penny off their Monday highs. Reports that President Trump is willing to meet with Iran’s Supreme leader Ali Kamenei and or his President, Hassan Rouhani “whenever they want” and “without preconditions,” may also be lending help to the slight early decline today in petroleum prices. While prices for oil and fuel have risen over the last week, they continue to be heavily influenced by daily headlines, accounting for many intraday price variations on the markets, with no clear signal of upwards or downwards breakouts.
Still, pump prices are beginning to rally after a few weeks of trailing downwards. According to the GasBuddy Live Ticking Average, gas prices across the country now stand at just under $2.88 a gallon, up 2 cents from yesterday, 3 in contrast to last week and a commanding 55 cents a gallon premium over prices paid this time last year. On the distillates side of the equation, diesel remains uncharacteristically expensive for this time of year. Not only is it more expensive than gasoline, but at $3.15 a gallon, it now costs 68 cents more than on this same date in 2017.
For the day, ahead look to more focus on the API guess for what can be expected in the EIA data numbers from its weekly petroleum inventory report. By all accounts, a likely draw in both crude and diesel seem to be in the cards, while gasoline may register a slight build. Either way, the start of a new month will begin to draw markets closer to estimations on supply scenarios for the second half of the year, with emphasis on calibrating prospects of a tightening of global oil supplies.