After seven days of a pure collapse on crude and heating oil, the market is finally showing a recovery with crude up $1.00 to $37.57, and diesel +$0.0440 as of Noon E.T. Gasoline seems to be the lone wolf, down $0.0050 as of noon E.T. as well. So why is gasoline not following the aggressive trends of diesel and crude? With lower imports and continued demand because of balmy winter weather, gas has been less volatile.
When it comes to WTI futures, we are approaching the lows of 10+ years ago that we witnessed in late 2008/early 2009. Yesterday, WTI reached a multi-year low of $34.53 but with the surge this morning, we are now $2.50 away from that. Market watchers gaze into the horizon waiting for the Federal Reserve to make a key decision on interest rates, due out mid-week. Rumor has it that the Fed is expected to raise interest rates for the first time in nearly a decade. Will this impact the market? It is definitely unclear if it will or not, but this interest rate hike may already be built into the market reactions of late. There is a high probability that this will happen, in spite of tensions in the commodity markets.
- London-based energy consultancy Energy Aspects said in a recent report that the global oversupply of diesel fuel will continue to worsen in January, surpassing 1.9 million b/d, resulting in a "nightmare scenario."
- The collapse of oil prices has driven many U.S. shale and other high-cost producers out of business and forced companies to put their development plans on hold.
- Global crude oil prices at seven-year lows will not continue and could swing upwards in as little as a year, OPEC Secretary-General Abdullah al-Badri said on Tuesday, as the low-price cycle leads to cuts in output from some producers.