As the end of this week winds down and people prepare for the holidays next week, light liquidity will most likely be the name of the game in our energy markets. Light liquidity means trading volume is lower than normal which is to be expected during this time of year. Therefore, the bid/ask spreads are wider. Meaning that if the computer-driven trading houses decide to either buy or sell a lot of volume, the market can move violently in one direction rather quickly. What does this mean for our industry? This means that our customers can be very opportunistic especially if we see a retracement in prices after this rally we’ve seen since the beginning of December.
Since the beginning of the month, the January ULSD contract has risen about 15 cents or 8% to $2.0295/gallon. Much of this move has been attributed to the OPEC+ oil production cut of 500,000 barrels per day through the end of March 2020, the reported first phase agreement of a trade deal between the U.S. and China, and the ULSD market preparing for the International Maritime Organization (IMO) mandate of lower sulfur content in maritime diesel fuel effective January 1, 2020. With trading volume next week expected to be even lighter than this week, this makes the market extremely susceptible to a light volume pullback that our customers can take advantage of. Please contact your sales representative here at Guttman Energy if you want to make sure you can take advantage of a possible pullback in prices during the holidays.
February WTI currently trades lower by $0.83 to $60.35/barrel, January ULSD trades higher by $0.0022 to $2.0317/gallon and January RBOB is up by $0.0069 to $1.7137/gallon.