What to expect
Given the ups and downs of last week with crude oil and local wholesale fuel prices, we expect price activity to remain moderetely steady with no significant movements.
To recap, Puerto Rico wholesale diesel prices ended last week around $3.48 per gallon on average, whereas wholesale regular gasoline ended at $3.12 per gallon on average. We dont see much movement in the market justifying a significant move from these averages during last 2 weeks. US West Texas Intermediate (WTI) closed last week around $76.49 per barrel, and today early trading has seen it hover around the $76 dollar range.
Highlights
US inflation as measured by the Consumer Price Index, rose 3.1% during January 2024
The Federal Reserve met last week, deciding to keep interest rates unchanged due to latest inflation numbers, and hinting that rate changes might not come till later this year. As of writing, target fed funds rate target is 5.50%, whereas the effective fed funds rate remains around 5.33%.
Philadelphia Fed President Patrick Harker said Thursday that the Fed may be "near" a time where it can begin lowering rates, while Fed vice chair Philip Jefferson predicted that wouldn't happen until "later this year."
US crude oil inventory rose to 3.5 million barrels, while production numbers remained unchanged compared to last 2 weeks
Commercial crude-oil stocks excluding the Strategic Petroleum Reserve rose by 3.5 million barrels to 443 million barrels in the week ended Feb. 16 and were about 2% below the five-year average for the time of year, the EIA said. Analysts surveyed by The Wall Street Journal had predicted crude stockpiles would rise by 3.2 million barrels. U.S. crude oil production was around 13.3 million barrels a day, unchanged from the previous week, while crude imports rose by 184,000 barrels a day to 6.7 million barrels a day and exports increased by 618,000 barrels a day to 5 million barrels a day.
OPEC+ is schedule to meet early next month, in March, to discuss crude oil production output. The cartel has currently set a price target of $90 per barrel, with last basket reference price (ORB) standing at around $82.90. We note, OPEC+ nations production approximately 40% of the worlds oil production and jointly the nations hold approximately 80% of world reserves.
Crude Oil Benchmarks
References
- https://www.marketwatch.com/story/u-s-crude-oil-stocks-rose-by-3-5-million-barrels-in-week-ended-feb-16-update-442d9084
- https://finance.yahoo.com/news/harker-said-fed-rate-cuts-are-near-while-jefferson-predicts-later-this-year-150158012.html
- https://www.bloomberg.com/news/articles/2024-02-22/fed-s-jefferson-warns-of-easing-too-much-on-improving-inflation
- https://www.investopedia.com/ask/answers/060415/how-much-influence-does-opec-have-global-price-oil.asp
- https://www.reuters.com/business/energy/what-is-opec-how-does-it-impact-oil-prices-2023-05-31/
- https://www.newyorkfed.org/markets/reference-rates/effr
- https://fred.stlouisfed.org/series/fedfunds
