Energy markets appear to have been jolted back to life as WTI dipped below the psychological $50 a barrel threshold to touch values not seen since October 8, 2017 on reports overnight that Russia would not join in a proposed oil production cut with OPEC and that Saudi Arabia wouldn’t go it alone on such cuts. The bearish mood, which carried over from yesterday, saw WTI surrender $1.27 to move it back to $50.29 a barrel while Dated Brent suffered a $1.47 a barrel setback to end the day at $58.76. Not even a slight dip in U.S. gasoline inventories as expressed in the EIA’s Weekly Petroleum inventory report was enough to stave off a run on refined product futures with gasoline giving up two and a half cents a gallon while diesel ditched four and a half cents in value.
As the world’s top economies assemble in Argentina for the G20, fresh reports now suggest Russia has had a change of heart. Not 24 hours after Russian President Vladimir Putin declared Russia was happy with current discounted prices, the latest news suggests an expected meeting between Saudi Crown Prince Bin-Salman and Putin will likely lead to cooperation on cuts. In reaction energy markets have done a U-turn and are now trading up over a dollar a barrel for both crude benchmarks with gasoline and diesel picking up steam as well. With so much rising on the actions of the three global oil producing leaders, the U.S. which wants no production cuts and Russia and Saudi Arabia which do, the outcome of the Buenos Aires summit could be crucial in setting the stage for the direction OPEC takes next Thursday on limiting crude output and determining what most can expect to pay at the pumps as Christmas approaches.
For now, drivers continue to see the effects of record dropping oil prices in the form of lower fuel prices which now rival last year’s lows. According to GasBuddy’s Live Ticking Average, median pump prices now stand at $2.506 a gallon, down 4.8 cents from last week, down 30.3 cents compared to last month and now only 1.3 cents a gallon above last year’s price. For diesel the news continues to improve for the fuel that moves the world’s economies. At $ 3.178 a gallon, diesel has fallen 12 cents in the last six weeks, although it stills holds a 34.7 cent a gallon premium over what most paid this time in 2017.
For the day ahead, look to markets gaining moderately as upside momentum carries through the petroleum pricing complex, following the latest hints from the G20 summit that will set in motion oil production cuts by the 25 members and non-members of OPEC beginning in the second week of December.