Oil Price Volatility is Alive and Well
Oil Price Volatility is Alive and Well
Unlike the DOW and other stock indices which have been on the rebound of late, the prompt NYMEX price for WTI crude has fallen from $65.80 per barrel on February 1st, to today’s midmorning price of $59.95. WTI’s low NYMEX price for the month occurred on February 9th closing at $59.20 per barrel. Producers attempting to stabilize prices on a global basis is like trying to push a rope up hill. As long as there is an abundance of petroleum stockpiles, and near record crude production, what should anyone expect?
Consumers love lower prices. Producers are not so thrilled. For the E & P companies that hedged their production at the higher levels, the recent downturn will not affect earnings much. Should price weakness prevail for a longer period, oil patch profitability will be squeezed. Since the world literally runs on oil, so many factors influence the price of this precious commodity. When someone sneezes in the Middle East, the whole world can catch the flu. OPEC’s influence, though, is not nearly as profound as it once was. With U.S. crude production at an all-time high, thanks to advances in fracking and horizontal drilling, our domestic production prowess in the world is increasing in significance.
Can we ultimately achieve energy independence? Maybe; however, we are still importing nearly 8 million barrels per day of crude to supplement our requirements. Last week, total petroleum products supplied in the U.S. topped 20 million barrels per day, up nearly 7% from the same period last year. As our economy picks up steam, we can also expect demand for petroleum products to stay strong. Over the longer term, we will have to wait and see what impact increasing consumption of alternative fuels, the rise in the application of wind and solar energy sources, and use of electric vehicles will have on petroleum consumption. In the meantime, don’t expect our local convenience stores and truck stops to stop offering gasoline and diesel fuel any time soon.
About Sun Coast Resources
Sun Coast Resources, Inc., one of the largest independent wholesale petroleum marketers in the nation, has established an outstanding track record over the course of the past 33 years of supplying high quality fuels, lubricants, transportations services and related programs and services to thousands of commercial, governmental and retail customers who have come to rely on our company to keep them running a peak performance, no matter what. Sun Coast is still actively fueling generators and equipment in Puerto Rico as the island works around the clock to restore power and infrastructure damaged by Hurricane Maria. Simply stated: Sun Coast delivers, no matter what, when or where.
Consumers love lower prices. Producers are not so thrilled. For the E & P companies that hedged their production at the higher levels, the recent downturn will not affect earnings much. Should price weakness prevail for a longer period, oil patch profitability will be squeezed. Since the world literally runs on oil, so many factors influence the price of this precious commodity. When someone sneezes in the Middle East, the whole world can catch the flu. OPEC’s influence, though, is not nearly as profound as it once was. With U.S. crude production at an all-time high, thanks to advances in fracking and horizontal drilling, our domestic production prowess in the world is increasing in significance.
Can we ultimately achieve energy independence? Maybe; however, we are still importing nearly 8 million barrels per day of crude to supplement our requirements. Last week, total petroleum products supplied in the U.S. topped 20 million barrels per day, up nearly 7% from the same period last year. As our economy picks up steam, we can also expect demand for petroleum products to stay strong. Over the longer term, we will have to wait and see what impact increasing consumption of alternative fuels, the rise in the application of wind and solar energy sources, and use of electric vehicles will have on petroleum consumption. In the meantime, don’t expect our local convenience stores and truck stops to stop offering gasoline and diesel fuel any time soon.
About Sun Coast Resources
Sun Coast Resources, Inc., one of the largest independent wholesale petroleum marketers in the nation, has established an outstanding track record over the course of the past 33 years of supplying high quality fuels, lubricants, transportations services and related programs and services to thousands of commercial, governmental and retail customers who have come to rely on our company to keep them running a peak performance, no matter what. Sun Coast is still actively fueling generators and equipment in Puerto Rico as the island works around the clock to restore power and infrastructure damaged by Hurricane Maria. Simply stated: Sun Coast delivers, no matter what, when or where.
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