Energy markets laid a beating on crude oil prices yesterday leaving October to stand as the worst month for trading since July 2016, in which West Texas Intermediate (WTI) lost over $10 a barrel in value, while Dated Brent suffered almost the same fate, losing over $9.50 on the month and representing an average 13% loss in total value. Apart from commodities markets now illogically attached at the hip to a declining equities market, traders seem to have fallen into the Saudi Arabian swoon that oil markets will remain well supplied despite an anticipated decline in Iranian crude exports coming into effect this Sunday.
Losses on the markets yesterday which saw WTI shed 87 cents a barrel to $65.31 and Brent dip 54 cents to $75.41, with gasoline losing over 3.5 cents a gallon while diesel grabbed a 1.9 cents gain, appear to have been motivated by reports that India and South Korea have managed to secure a deal with the U.S. on waivers that would allow for continuation of Iranian oil imports. A continuation of several weeks of inventory builds, including yesterday’s 3.5 million barrel increase in American crude stockpiles, compounded by talk of a global economic slowdown were also palpable catalysts in sending the hydrocarbon south.
The early morning trades appear to continue in their bearish ways with crude oils down under half a dollar a barrel and WTI testing sub $65 a barrel territory and possibly landing on values not seen since June 6 when it was valued at $64.78 a barrel. The downward trend isn’t all bad, especially for drivers who are now seeing pump prices a full 20 cents a gallon lower than on the Memorial Day highs of nearly $2.99 a gallon.
According to GasBuddy’s Live Ticking Average, October’s sell-off is now starting to show up on the average fill-up with the median price for gasoline coming in today at $2.779 a gallon, down 6 cents on the week and nearly 11 cents below average prices last month, narrowing the difference between last year and this year to only 27 cents a gallon. Not surprisingly, given the breakout in distillate prices this year, diesel at $ 3.28 a gallon commands a near 53 cent a gallon premium over last year’s costs from this same day.