Fuels Market Watch 24

FUEL MARKETS TODAY – Market Overview

Crude oil prices have continued to sink, and are formally in a bear market. WTI (West Texas Intermediate) crude prices in today’s trading session opened at $60.75, a drop of $0.89 from yesterday’s opening price of $61.64/b. This was the ninth day in a row that crude prices have fallen. Currently, WTI prices have sunk below $60/b. Gasoline futures prices opened a tenth of a cent higher in today’s trading session, while diesel futures prices fell. Prices for all three trended down after opening, and the market appears to be heading for another week in the red.

Crude oil is now officially in a bear market. The streak of losses has brought WTI crude futures prices down from a high opening of $76.18/b on October 4th, to an opening of $60.75/b today. This loss amounts to $15.43/b, or 20.2%. The accepted definition of a bear market is one where prices fall, and the market pessimism creates more selling, which makes the downward movement self-sustaining. The general definition used to define a bear market is when the price of a commodity drops by 20% from its 52-week high.

Since the high opening in the first week of October, WTI crude has finished in the red for five consecutive weeks, assuming that this week also ends in the red (which appears likely.) As of the time of this writing, WTI crude prices are down by approximately $3.30/b for the week (5.2%.) Gasoline futures prices have dropped by around 9.2 cents/gallon (5.4%.) Diesel futures prices are down by approximately 3.4 cents/gallon, or 1.6%.

OPEC will meet in Abu Dhabi this weekend. One of the key agenda items will be the oil production cut agreement, and whether the OPEC-Non-OPEC participants should act to tighten supply. An announcement of consensus in that direction is likely needed to support December and January forward prices, whether or not the group takes action immediately. Supplies were expanded in anticipation of the sanctions on Iran, but the expected supply situation has been relaxed by the granting of exemptions to eight key countries importing Iranian crude.