Crude price supports collapsed yesterday with WTI dropping $1.32 to $49.88, its lowest posting since Sept 13, 2017, while its European counterpart, Dated Brent fell 67 cents to end the trading session at $59.61 a barrel with refined product also giving up a couple of pennies a gallon on the day.
News that Russia pumped out 11.42 million barrels a day in November, along with earlier reports that Saudi Arabia had done the same, as well as the EIA’s prediction that US shale production would exceed a record 8 million barrels a day in 2019, was enough to send traders to the selling column with little to comfort those holding fast on the belief that global supplies would ultimately shrink. The overall mood of markets that a global slowdown appears at hand coupled with a slowing Chinese economic outlook as well as demand implications for another likely rate increase by the FED this week, confirmed for many the need to join the bearish downward moves being signaled on energy markets this morning.
Despite a 1.2 million barrel a day cut in oil production beginning in two weeks as well as a planned 325,000 daily barrel curtailment in Alberta oil at the same time, markets have bought into the notion that a global slowdown is at hand, thus explaining this morning’s better than $1 a barrel losses in crude prices in early trading.
Drivers, on the other hand, continue to earn the continued benefits of two months of declines in overall petroleum prices. At $2.377 for a gallon of gasoline, according to GasBuddy’s Live Ticking Average, median pump prices are down 4.3 cents compared to last week, 22.8 cents lower than last month and now 4.1 cents cheaper than on this same day in 2017. On the diesel side of the fuel equation, at an average of $3.074 a gallon, the vital transport and equipment fuel is 14.7 cents below its cost last month but still 24.3 cents a gallon more than last December 18.
While some profit-making may be taking place with speculators picking up distressed barrels for the long haul, markets are moving decidedly to the negative prompted by fears of an expanding slowdown in the world’s economy made no easier by prospects that the FED is poised to raise interest rates. With reports of a build in crude stockpiles at the Cushing Oklahoma oil hub and another tepid weekly inventory report from the EIA on petroleum data, traders will have little appetite for celebration. Look therefore to another down day on the energy markets with more losses across the petroleum price complex, in general.