Oil is trying to hold ground after Friday’s fear-based market sell-off. Tariff fears and now talks of global growth fears after a sub-par jobs report, not to mention a rising rig count, sent oil lower. Yet current strong demand, falling OPEC productions as well the possibility of a major reaction by the U.S. after Syria allegedly crossed the chemical weapons line in the sand. President Trump said that Syria would pay a big price for this “mindless chemical attack” and called Syrian President Bashar Assad an “animal”. President Trump said that as far as a response from the U.S., he wouldn’t take anything off the table. This threat comes as the Russian military said on Monday that two Israeli F-15 war planes carried out airstrikes on a Syrian air base near Homs on Sunday, the Interfax news agency reported.
Oil was already under pressure when Baker Hughes reported that drillers added 11 new rigs. I thought they promised low oil and gas prices because of shale oil. How is that working out? You just must go to the pump to find out. Trilby Lundberg, of the Lundberg survey, reminds us that is isn’t only about supply but demand. Lundberg says that the U.S. average retail price of regular grade has climbed nearly 8 cents in the past two weeks to $2.7364. It is up 14.63 cents gal. over the past six weeks, driven mostly by higher oil prices, and to a far smaller degree by the annual higher-cost Spring/Summer blend specs which are still rolling out.
The recently lower oil prices mean that any pump price rises from here are likely to be small. Unless oil prices reverse direction and rise again, we are probably either at or near a peak pump price for the season. As of now the U.S. downstream industry is faring a bit better, with both refiners and retailers having recovered some gasoline margin since March 23. However, they both remained squeezed and under pressure to seek further margin improvement when possible, according to Lundberg.