Week in Review: Diesel Supplies Tighten While Oil Jumps 2% – Is This Just the Beginning

Week in Review: Diesel Supplies Tighten While Oil Jumps 2% - Is This Just the Beginning?

By Sydney CaseyPublished On: November 1, 2024Categories: Daily Market News & Insights, Week in Review

Oil prices rose by over 2% on Friday after reports that Iran is preparing a retaliatory strike on Israel from Iraq, raising concerns about escalating conflict in the Middle East. West Texas Intermediate (WTI) crude reached back up to $71.17, almost a $2/bbl increase. Analysts believe any response from Iran may be a limited show of strength rather than an attempt to escalate into full-scale warfare. Recent tit-for-tat attacks have seen Israeli airstrikes on Iranian sites following missile strikes from Iran, contributing to ongoing tension in the region.

The market's rise follows a volatile week, as prices are also buoyed by speculation that OPEC+ might postpone a planned production increase to manage softer demand. Next week's U.S. presidential election and China's National People's Congress meeting are anticipated to influence oil price dynamics, as key policy stances on oil-producing nations Iran and Russia come into play.

China's October manufacturing data showed growth, reflecting a response to recent stimulus efforts, though analysts expect growth to remain focused on domestic demand rather than the pre-COVID export-driven model. As U.S. presidential candidates Kamala Harris and Donald Trump diverge on oil policy towards nations like Iran and Russia, any shifts in U.S. foreign policy could further impact global oil markets.

This week's Department of Energy and EIA report shows U.S. crude oil refinery inputs at 16.1 Mbpd, with refinery utilization at 89.1%. Gasoline and distillate production both decreased, while crude oil and gasoline imports also saw declines. Commercial crude oil inventories fell by 0.5 million barrels, about 4% below the five-year average, while gasoline and distillate inventories also dropped. Overall, commercial petroleum inventories decreased by 9.5 million barrels.

Total products supplied over the last four weeks increased, with gasoline, distillate, and jet fuel demand all higher than the same period last year. Diesel days of supply are low, maintaining below 30 days for three weeks, reflecting high seasonal demand and exports. Prices for WTI and heating oil have risen compared to the previous week, while retail gasoline prices dropped, and diesel prices saw a slight increase. If refinery utilization doesn't improve, diesel futures may continue to rise, potentially driving more production as winter approaches.

Prices in Review

On Monday, crude oil opened at $68.98 and tapered off a bit in Tuesday and Wednesday trading. Crude started facing upward pressure on Thursday, and opened this morning at $70.44, an overall increase of $1.46 or 2.12%.

Diesel opened on Monday at $2.2023, dropped off slightly on Tuesday, and started climbing back up beginning on Wednesday. This morning, diesel opened at $2.2649, an increase of 6 cents or 2.84%.

Gasoline saw a bit of a volatile week opening at $2.052 on Monday before dipping on Tuesday and Wednesday. Gasoline began increasing on Thursday and opened at $2.0010 this morning. This shows a drop of 5 cents or -2.48%.

This article is part of Daily Market News & Insights

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