Fuel Price Index [06.21.2018]Crude inventories were estimated to fall by about 2.5 mmbls., so the draw of almost 6 mmbls. is definitely supportive of prices – but likely not the focus of traders for too long. Distillates and gasoline are within a penny of unchanged as traders await news on several fronts – the most pressing seems to be this week’s OPEC meeting. Iran (and to a lesser extent, Venezuela) is at loggerheads with Saudi Arabia (with a bit of Russian support), and there is a possibility of a meeting ending without consensus for the first time in over 6 years.
There is a lot of pre-meeting posturing going on, but it seems as if the meeting may well end with only a slight increase in planned production. Also very much in the news is the battle of wills between President Trump and the Chinese relating to import/export tariffs. The details change every day which just makes me think that there is some negotiation going on behind the scenes. Volatility of oil prices has, understandably, kicked up and that factor is starting to express itself in the pricing of option premiums.
Natural Gas – almost at a 15 year low. Definitely worth exploring 2 and 3 year fixed price options.
Jim Slattery, President