Petroleum energy markets drifted sideways, tilting down slightly with crudes losing several pennies to end the trading session with WTI at $51.56 and Dated Brent struggling to maintain its $60 floor at $60.21. Gasoline surrendered 2 cents a gallon in value while diesel pared 1 cent. The overall sentiment on the day appeared to be a minimalizing of the impacts any OPEC move on cutting back output will have when non-OPEC production continues to rise and trade tensions between the U.S. and China threatens overall global demand and economic momentum.
Placing less faith in almost any news that could be construed at bullish, including an API report, which if confirmed by this week’s EIA weekly data, could see gasoline inventories drop for the first time in several weeks, traders appear resigned to a lower-for-longer mentality, despite the fact that crude’s dramatic collapse of over one third of its value in such a short time span has only happened following the 2008 super energy bubble and OPEC’s ill-fated attempt at the end of 2014 to flood global oil markets. Not surprisingly then, morning trades are decidedly negative with WTI trading down 50 cents a barrel, while Brent is down 80 cents and once again below the $60 threshold.
Though producers have real reasons to be concerned, motorists are breathing a collective sigh of relief as pump prices continue to moderate, reflecting belatedly the month and a half-long declines on energy markets. According to GasBuddy’s Live Ticking Average, the national median pump price sits at $2.521 a gallon, down 6.1 cents from the previous week and 29 cents compared to last month. Unlike diesel, which at $3.187 is 34.4 cents higher than last year, gasoline prices are a slight 2.2 cents a gallon above November 28, 2017 values.
For the day ahead, the markets are likely to compound early losses with traders taking a short-term view of the overall energy complex and its troubling potential for supply shortages, made worse by low spare capacity and the recent price collapse which will inevitably lead to many producing nations, including the U.S. scaling back on output as they burn through cash. Without any tangible evidence of cutbacks in output, however, speculators will continue shedding long bets in favor of the immediate. Oil can, therefore, be expected to fall below $50 a barrel by the end of the week as only news from the December 6 OPEC meeting will halt the freefall.