The petroleum price complex endured yet another beating yesterday as traders liquidated their holdings in both crude and refined products causing West Texas Intermediate (WTI) to tumble $1.61 a barrel to $63.69 and Dated Brent suffering an even deeper $2.58 a barrel loss to $72.89.The declines now set crude prices back to levels not seen since April 9 and with gasoline falling 5.19 a gallon, the benchmark price for regular on the NYMEX at $1.7365 a gallon represents the lowest levels seen since March 8th.
A series of headlines this morning will give little solace to the oil bulls as reports suggest as many as eight nations will be given oil waivers in advance of this Sunday’s U.S. trade sanctions on Iran. Any thought of a tightening of global oil supplies is therefore unlikely and with more positive signals emerging from the trade tiff between the U.S. and China, markets aren’t about to change their approach to petroleum price valuation. Indeed, the early moves by the markets this morning point to further devaluation and interest in hydrocarbons with oil trading down a quarter of a dollar and dragging he liquids with it.
Not surprisingly, American drivers are finally beginning to reap the benefits of the October sell off which saw WTI oil lose over $10 a barrel. According to GasBuddy’s Live Ticking Average, national median prices at the pumps now stand at $2.768 a gallon, the lowest prices since April 22nd and now 6 cent lower than last week and 13.8 cents a gallon lower than last month. In contrast to last year on this day, the premium drivers now pay has been reduced to 25 cents a gallon or less than half the spread of diesel prices which, at $3.28 a gallon, are still 51.5 cents above November 2, 2017.
Despite a strong labor market report placing unemployment at 49-year lows, markets aren’t likely to renew confidence in energy commodities today as further evidence will be required to demonstrate a real tightening in oil and fuel supplies. At this time markets appear to be adequately supplied with assurances by key OPEC producers that inventories and output are sufficiently adequate to cope with any anticipated shortfalls caused by an oil embargo on Tehran. For now, trades point to a net loss on the day with oil, gasoline and distillates reaching new multi-month lows to mark the end of a fourth week in a row of net losses.