Oil sold off slightly yesterday as markets considered increasing output by Russia and Saudi Arabia which sent WTI oil down 30 cent to $69.46 a barrel, while Brent slipped 32 cents to end the trading day a $72.58. Even the big draw in gasoline stocks from Wednesday’s surprising EIA inventory reveal wasn’t enough to stem the pessimism as gasoline dropped a quarter of a penny with only diesel managing a gain of about half a cent.
The rend, which could be considered ambivalent may soon face more sobering tests of the effect of sanctions on Iran and dwindling output from Venezuela as both Asian demand seems to have picked up while Japan announced yesterday it had taken delivery of its final cargo of Iranian oil in the wake of those looming U.S. sanctions. The more interesting news from all of this seems to be a sense of pushback from Saudi Arabia, which indicated that after a 750,000 barrel a day increase in oil production, it would not further increase output, once again leaving wide open, prospects for a tightening oil supply outlook in the second half of this year. The signal may also be in response to attempts by the House of Representatives and Senate to usher through bills aimed at overlaying U.S. anti-trust laws on OPEC’s cartel. These legislative initiatives will now be an added feature to the growing factors to be considered in future energy prices.
As we head into another summer weekend, gas prices appear to be avoiding controversy, remaining pretty much in the area they’ve been over the last month. According to the GasBuddy Live Ticking Average pump prices are hovering around $2.88 a gallon, with little or no change from last week, let alone last month. Still a gallon of gasoline will set you back 59 cents more a gallon compared to last year, while diesel, which sits at $3.16 a gallon is still 72 cents higher than on this same day in 2017.
This morning, both oil and gasoline are showing signs of renewed strength with oil attempting to breach $70 a barrel for WTI, while gasoline reaches for a 3 cent a gallon breakout with diesel looking to push up 2 cents. Expectations are that this is probably as good as it gets with traders nodding off for the weekend with few waves being made in the absence of any new challenges or developments markets need to address until next week.