Not a whole lot of action this weekend. Last Friday the stronger U.S. dollar index, in reaction to the jobs report, played the biggest role in weakening WTI crude. However, some late day buying on Friday mitigated crude’s fall; WTI closed down $0.13 to $41.80. Looking at last week as whole, gasoline prices settled up almost 6 cts/gallon, mostly in response to refinery outages and unplanned turnaround. Chicago spot gas prices were really on the move last week as BP’s Whiting refinery and Marathon’s Robinson refinery had operational problems, but those have since been resolved.
Over the past year we have been amused a handful of times with talks of a “production freeze” yet nothing of the sort has actually unfurled. Well, the boy who cried wolf is back at it again. Late last week and throughout the weekend calls were made by some OPEC members that production should, and needs to, be limited in order to mitigate supply, which is feverishly outweighing demand on a global level. Last time around, Iran was the first to dismiss the idea, being that it was trying to rebuild its production back up to pre-sanction levels. However, this time around, Russia seems to be the first and strongest push against such a freeze. Russian Energy Minister Alexander Novak told Reuters reporters that “the position of Russia is that the prerequisites for this have not yet come to pass, considering that prices are still at a more or less normal level.” An informal meeting of OPEC members is slated for September 26-28 in Algeria.
Chart above, taken from vox.com from the EIA’s Oil Market Report, illustrates the current supply glut world-wide.
Crude has been hovering in the mid to low $40’s for quite some time now. Last week, trading did dip below $40 to $39.19, but some mid-week unexpected inventory levels helped keep WTI positioned above $40. At these levels, production has been revved up. Domestically, Baker Hughes reported last week of the 6th consecutive increase in the oil rig count, which now stands at 381.
The market is currently firing on all cylinders. WTI is up $1.13 to $42.93. As for refined products, ULSD is up $0.0304 and Gasoline is up $0.0059.