Energy markets moved lower yesterday as OPEC and its non-OPEC partners could not cobble together any form of agreement on decisive crude oil output cuts, leaving WTI down $1.40 a barrel on the day while Dated Brent trimmed $1.50 to land at $60.06 by the session’s end. Were it not for the EIA’s surprisingly bullish weekly inventory report which showed a 7.3 million barrel draw, reversing several weeks of builds, the overall downward slide of 2.4% could have been worse, especially with refined products shedding 3 to 4 cents a gallon as collateral damage.
The early morning had traders more optimistic that a deal could be reached in light of an inconclusive outcome from yesterday’s gathering which no doubt had to consider a tweet by President Trump urging the cartel not to cut back on production as the world “does not want to see, or need, higher oil prices!” With Saudi Arabia pushing hard for a deal, Iran not willing to play ball and Russia only seeking a symbolic cut as winter cold there see’s most of its oil output used domestically a breakthrough appeared elusive. Despite the deadlock, early indications suggest Russia is acting as a mediator between archrivals Iran and Saudi Arabia and that a more limited production cut may be within reach, satisfying Gulf States clamoring for a hard cut. The early indications of a settlement appear to depend on OPEC shouldering a 650,000 barrel a day cutback and a handful of no-OPEC nation nations led by Russia being responsible for the other 350,000. Rumors of this as the basis for a year-long agreement has markets building a little more confidence into the petroleum price complex with crudes up over 1.5% and refined products up over 1% as the business world watches closely the final outcome of OPEC+ negotiations.
Far removed from the oil intrigue, consumers across the country continue to enjoy the ever-shrinking cost of fill-ups. According to GasBuddy’s Live Ticking Average, pump prices are now $2.437 a gallon, 2.8 cents below last week’s prices and a full 29.6 cents less than what drivers paid last month. In contrast to last year on this same day, the cost to fill up is now 3.9 cents a gallon less, boast that cannot be made for those using diesel, which at $3.126 a gallon, still stands at 28.5 cents higher than last year.
Depending on the outcome of OPEC’s second day of meetings, energy prices could catch a break or improve markedly as an agreement to moderate oil production cutback could allow the petroleum price complex to achieve a floor in prices that could end the weeks of successive declines which saw oil lose 25% in total worth since the beginning of October. Look for today’s trading session to end on a high.