Halloween is right around the corner and magic is in the air. With the markets showing continued tightening and everyone on the edge of their seats awaiting the verdict from OPEC in regard to production cuts going beyond March of 2018, oil prices have reached the highest levels for this year. Prices in WTI and Brent crude have reached highs of $53.93 and $60.51 respectively. As shown in the crude YTD (year to date) chart below, crude prices began a descent in mid-April 2017 due to a rise in U.S. production before rallying over 25% from their mid-June lows to their most recent highs with signs of oil rebalancing and continued rhetoric by OPEC and, as of late, the Saudis and Russians declaring their support for extending a global deal to cut oil supplies for another nine months.
Meanwhile, as we look forward towards November, temperatures are dropping around the nation and we must all prepare for the change of seasons that is upon us. The NOAA (National Oceanic and Atmospheric Administration) reported last week that La Niña is likely to stride through the U.S. resulting in wetter and cooler weather in some northern parts of the country. The southern states are expected to see drier and warmer conditions.
Even though this could shape the winter outlook for us in the near term, Mother Nature can be unpredictable and we should all take proper steps to prepare for this upcoming season. A couple of things to keep in mind: Where you find cooler and wetter weather, demand for heating oil increases which can have a direct impact on market and rack prices. To prepare for this upcoming weather, it is important to use winter additives in diesel products to avoid fuel icing. This would be especially concerning in the northern parts of the country where La Niña could heighten conditions going into this winter season.