Gasoline and diesel tumbled in New York on speculation that the union representing 30,000 U.S. oil workers will reach an agreement with refiners on a new contract, ending a strike that’s dragged on for more than a month. Diesel futures slid as much as 2.6 percent and gasoline as much as 1.8 percent as the United Steelworkers union sent delegates to Houston to review any proposals from Royal Dutch Shell, which is bargaining on behalf of oil companies. The union was waiting for Shell to make an offer on Thursday, three people familiar with the talks said, while asking not to be identified because the information isn’t public. An accord would end a strike at refineries that account for almost 20 percent of total U.S. refining capacity.
National Average Price for Regular Unleaded: $2.440 Month Ago: $2.239 Year Ago: $3.503 National Average Price for Diesel: $2.913 Month Ago: $2.816 Year Ago: $4.008
US Dollar per Euro = $1.057066 US Dollar per Canadian Dollar = $0.784560 US Dollar per Chinese Yuan = $0.159765 US Dollar per Japanese Yen = $0.008232 US Dollar per Mexican Peso = $0.064358
US crude for delivery in April traded 0.89% higher at $48.60 per barrel at 8:22 GMT, shifting in a daily range of $48.65-$48.03. The contract fell to a 1-1/2-month low of $47.33 on Wednesday before paring its decline to settle the day 0.25% lower at $48.17. Meanwhile on the ICE, April Brent was up 1.01% at $58.12 a barrel, having ranged between $58.25 and $57.65 during the day. The contract jumped 2.04% yesterday to $57.54 a barrel after it earlier fell to $55.92, the lowest since February 11th. Brent traded at a premium of $9.52 to its US counterpart, up from Wednesday’s settlement at $9.37. Oil prices were on the rise for a second day as investors covered short positions ahead of the expiry of both benchmarks’ front-month contracts.
Brent crude oil slipped to a one-month low below $56 a barrel on Wednesday before steadying as a rally in the U.S. dollar and global oversupply weighed. The dollar hit a fresh 12-year high against the euro, gaining more than 1 percent to trade at $1.0561 against the single currency. The dollar index has rallied by 25 percent since last May, making commodities priced in the greenback more expensive for holders of other currencies. Russia's crude oil exports are also set to rise this year, Energy Minister Alexander Novak said, despite some expectations of a plunge in production due to lower prices following the crash from above $100 a barrel last year.
After the steep selloff between June and January, the oil market had recovered in February, and appeared to reach some sort of a plateau toward the end of the month. In part, that was because of a rush to buy up oil stocks to be able to sell them at higher prices in the future, which absorbed some of the global glut. But as storage tanks around the world have filled up, concerns about the oversupply of crude are returning. A barrel of Brent crude for April delivery was nearly 8% lower since the beginning of March. On Tuesday, the price of a barrel of Brent traded on London’s ICE Futures exchange fell 1.3% to be at $57.76 a barrel.
The global crude-oil market will return to balance in the second half of this year as demand growth picks up and high-cost producers trim output amid lower prices, OPEC Secretary-General Abdalla El-Badri said. Consumption in 2015 will increase by 1.2 million barrels a day after rising more slowly than expected last year by less than 1 million barrels a day, El-Badri said Sunday at a conference in Manama, Bahrain. Crude has lost half its value since June, raising risks for suppliers with comparatively high costs of production. The U.S. is idling rigs and delaying wells even as it pumps oil from shale and other deposits at the fastest pace since 1983.
Storage space for crude oil is in danger of filling up world-wide, and that could lead to even lower prices, Nicole Friedman reports. U.S. crude-oil supplies are equal to nearly 70% of the nation’s storage capacity. The Cushing, Okla., storage hub is expected to hit capacity this spring. European commercial crude storage could be more than 90% full, Citigroup Inc. believes, while inventories in South Korea, South Africa and Japan could be at more than 80% of capacity. Producers could end up selling oil at a discount to the few remaining buyers with room to store it, but consumers could still benefit as refineries turn crude into gasoline and other fuels. More storage tanks are being built across the U.S., and some large tanker ships are being leased to hold the oil. Still, “the inventory levels are actually getting scary,” said Harish Sundaresh, portfolio manager and senior commodity strategist for Loomis, Sayles & Co. “When I look at storage, it doesn’t seem to me that we have enough.”
National Average Prices: Regular: Current Average - $2.458/gallon Month Ago Average - $2.166/gallon Year Ago Average - $3.474/gallon Diesel: Current Average - $2.926/gallon Month Ago Average - $2.805/gallon Year Ago Average - $4.010/gallon
US Dollar to Canadian Dollar = 0.801862; US Dollar to Chinese Yuan = 0.159720; US Dollar to Euro = 1.095276; US Dollar to Japanese Yen = 0.008332; US Dollar to Mexican Peso = 0.065868