Another Tuesday brings another massive sell-off of energy assets by traders, who yesterday delivered a 7% devaluation of crude oil, forcing WTI down $3.33 a barrel to $53.43, its lowest close since October 26, 2017 and down over $23 dollars since the beginning of October. Dated Brent suffered an even greater beating, falling $4.26 a barrel to end the session at $62.53. Refined products were caught in the maelstrom with gasoline losing over 9 cents a gallon while diesel shed 10 cents. At just over $1.51 a gallon, the futures contract for fuel now stands at values last seen July 5th, 2017
The energy markets Tuesday blood-letting was in response to geopolitically charged inferences that President Trump’s unwillingness to find Saudi Prince Mohamed Bin Salman responsible for the murder of journalist Jamal Khashoggi would likely lead to the Kingdom refraining from oil production cuts in December. The tech sell-off and overall losses in the S&P 500 were also cited as sources for crudes malaise. Ironically the crash in crude might now be a catalyst in uniting Russian and OPEC in a common drive to reduce output to stem oil’s freefall in price.
With Americans taking to the road in droves for Thanksgiving, relief at the pumps seems to be the order of the day with gas now down nearly 24 cents in just the past month. According to GasBuddy’s Live Ticking Average, the median price for fuel now sits at $2.60 a gallon, 7 cents lower than last week and now only 7 cents higher than on this same date in 2017. Even diesel which commanded a 40 cent a gallon premium over prices last year has been tempered somewhat, standing 3 cents cheaper than last week and at $3.21 a gallon, 8 cents less than last month, even while being 37.6 cents higher than last year.
With today’s EIA weekly petroleum status report likely to show draws across the energy commodities spectrum, a first in at least two months, markets are likely to respond positively and perhaps challenge the bearish trends of the last several weeks. A closer look at the fundamentals may prompt traders to take advantage of distressed commodities given no clear evidence of a looming recession or drop in global demand for energy. The day will likely see lighter trading into the afternoon, suggesting values at noon easer are likely to hold until after the Thanksgiving when full trading resumes.