Fuels Market Watch 24

FUEL MARKETS TODAY – Market Overview

Oil prices continue to fall today. All residual gains from Friday’s brief rally have been erased. WTI (West Texas Intermediate) crude prices in today’s trading session opened at $66.68, down by $0.87 from yesterday’s opening price of $67.55/b. Gasoline and diesel futures prices also opened lower this morning. Crude and product prices continue to head down this morning. As of the time of this writing, WTI prices have crashed through the $66/b level and are hovering around $65.80/b.

Although sanctions on Iranian exports will come into full force in just a few days, on November 4th, concerns about oil supply tightness now are overshadowed by the prospect of a global economic slowdown and destruction of demand. Saudi Arabia and Russia also have calmed upward price movements by pledging to raise oil output as needed. Saudi Arabia has stated that it could raise production to 11 million barrels per day more quickly than forecast. Producers even have noted the possibility of another supply glut, which could cause global oil inventories to swell once again. Upside price risk remains, however, since there is only a small buffer of spare production capacity.

Beyond the basics of supply and demand, however, oil prices are responding to the turmoil in global markets. Stock markets have been volatile, but most of the movement has been down. There are hopes for another rally in the U.S. stock market today, given some solid earnings reports that may partially counter the slide in technology stocks. There also are hopes for progress in U.S.-China trade war negotiations that may deter the U.S. threat of imposing tariffs on all remaining types of Chinese imports.