The staff of FUELSNews presents FUELSNews 360° Q1 2018
Quarterly Report: Market News & Information.
FUELSNews 360°, published four times a year by Mansfield Energy, analyzes and summarizes the prior quarter’s activity in the oil, natural gas, renewables and refined products industries. The purpose of this report is to provide our customers industry market data and trends both domestically and globally and deliver some insight into upcoming challenges facing the energy supply chain.
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Check out this excerpt from the Executive Summary:
The first quarter of 2018 began with prices shooting upwards, followed by a severe market correction that spanned from equities to commodities. After gaining $5/bbl in January,
crude prices gave up all of those gains in February, only to rally throughout March and end the quarter higher. Prices rose $4.74 overall, ending the quarter just below $65/bbl.
Global Political Impacts
Geopolitical uncertainty plagued the market with fear of U.S – China trade war, Venezuelan sanctions and the Iran nuclear deal. These factors, combined with roughly balanced supply and demand, created an extremely volatile
atmosphere for fuel prices. Late in the quarter, Trump’s appointment of two hawkish leaders to his administration increased the risk of volatility in Q2.
Economies around the globe continue to grow in sync, leading to increased demand for oil. However, economic growth brought fears of rising interest rates and a stronger dollar, which contributed to February’s market correction.
Turbulent Q1 for Fuel
Like crude, fuel prices experienced a turbulent first quarter. Below average temperatures led to a spike in natural gas prices in January. Power companies switched to diesel generators, drawing down diesel inventory levels during a time when inventories historically rise. Counter-seasonal
diesel demand brought diesel prices higher, carrying crude and gasoline prices with it.
Refineries began their seasonal maintenance during Q1, which contributed to the strains on supply. Although severe supply outages are unlikely, the uptick in demand combined with lower supply put upward pressure on prices.
What’s Ahead in Q2?
Looking towards Q2, the seasonal expectation is that spring driving season will keep fuel prices elevated throughout the quarter. While the trend is towards higher pressure, geopolitical uncertainty muddies the water when looking to the future. If Trump’s administration takes
a more aggressive stance in the Middle East, prices could skyrocket. Alternatively, a benign spring could reduce market risk premiums and bring prices lower. Overall, expect supply or demand disruptions to play a key role driving prices in Q2 and beyond.
Regionally, consumers in the Midwest are benefiting from cheap Canadian oil. Nate Kovacevich gives more details on these developing trends on page 20.
The Florida market, which does not have a refinery or a pipeline feeding terminals located in the state, remained well supplied throughout Q1 mostly due to the increase in the number of Jones Act vessels. Chris Carter gives an update on page 18.
Time to Clean Your Tanks
The end of Q1 brings in the spring season. Warmer
temperatures create an atmosphere for microbial growth to flourish in fuel tanks, meaning fuel can go from containing small impurities to heavy contamination in just a few weeks. Clint Hamlin gives five steps for cleaning fuel tanks and keeping them clean in his article on page 30.
We hope you enjoy this quarter’s issue of FUELSNews 360°. If you have any questions, or would like to request additional copies, email us at firstname.lastname@example.org.