An apparently oversupplied crude market continued to whipsaw crude oil as the hydrocarbon again lost ground yesterday tumbling 54 cents a barrel to $61.67 for West Texas Intermediate (WTI) and a slight loss for Dated Brent, which ended the day at $72.13. Based on Wednesday’s bearish EIA weekly inventory report which showed a 5.8 million barrel hike in stockpiles and a rise of 1.9 million barrels for gasoline, diesel’s draw of 3.5 million barrels caught the market’s attention sending the distillate up nearly 5 cents to $2.255 a gallon.
Sifting through a variety of data and commentary, it may be easy to lose sight of the strong demand numbers for fuel in the U.S. and OPEC’s realization that increased output to compensate for expected drops in Iranian sanctioned output may not have been realized due to last minute waivers granted by the State Department to at least eight countries who are still free to avail themselves of Iranian oil. Talk of Russia and Saudi Arabia contemplating production cutbacks in 2019 coupled with demand growth from China’s teapot refiners and the EIA’s reveal that in the past four week’s U.S. crude demand rose 4% over last year to 20.7 million barrels a day, suggests an upward correction in the energy price valuations may not be far off.
Drivers across the country the country continue to benefit from weeks of successive declines in oil prices and according to GasBuddy’s Live Ticking Average, pump prices are now weighing at $2.733 a gallon, down 3.4 cents compared to last week and off 17.4 cents in contrast to last month. While diesel, at $3.262 a gallon is almost 46 cents higher than last year on this date, gasoline is a modest 16.6 cents higher than on November 8, 2017.
In a reprise of an all-familiar trend, energy markets are once again trending downwards with the crudes down slightly by 30 cents a barrel and with the exception of gasoline holding onto its Wednesday levels, diesel is down nearly 3 cents a gallon with some profit taking. Overall this relegates the crude oil complex back to prices not seen since March 15, in the case of WTI and April 17 for Brent.
Barring any unforeseen news today, look for the trading session to end once again in negative territory as WTI seems destined to drop below $60 a barrel over the next few days. Another interest rate hike could also further strengthen the greenback, adding pressure to crude prices and in advance of the end of the December oil contracts.