Oil markets finished higher again yesterday continuing the current upward trend. At the close of the session, WTI crude closed up $0.31/bbl to close at $69.61. RBOB and HO also closed higher by $0.0392/gal and $0.0257/gal to finish at $2.1623/gal and $2.1769/gal respectively.
Markets are mixed today on light trading and very little news driving the market. Three factors offering some support however are Saudi Arabia halting crude transportation through a key shipping lane, falling inventories in the U.S. and easing trade tensions between Washington and Europe.
“The major source of bullish impetus stemmed from Saudi Arabia’s decision to temporarily halt all oil shipments through the Bab al-Mandeb Strait” said an industry analyst from the brokerage firm PVM. This temporary halt, due to attacks on oil vessels by militants in Yemen, is currently having minimal impact and a supply disruption is not expected. A move to block the strait however would essentially stop oil shipments through the Suez Canal and the SUMED crude pipeline linking the Red Sea and Mediterranean Sea. According to the U.S. Energy Information Administration, approximately 4.8 million barrels per day of both crude and refined products flow through that strait towards Europe, the U.S. and Asia. Adding support to the energy sector is the recent agreement between the U.S. and the European Commission alleviating the risk an immediate trade war which would have major global economic implications.
As of this writing RBOB is currently trading up slightly over $0.0100/gal while HO is somewhat flat heading into the weekend.