Analysis by Dr. Nancy Yamaguchi
Oil prices appear to be headed for their fifth consecutive week of declines. West Texas Intermediate (WTI) crude prices are below $43 per barrel (/b), the lowest prices since August 2016.
Global oversupply continues to be the key issue in the market. The OPEC-non-OPEC production cuts are being partly offset by production gains in the U.S. and other non-OPEC countries. Judging from futures prices, the market fully expects this to continue. This week appears to be headed for another finish with prices in the red.
The last four weeks brought continuing evidence of oversupply and burgeoning stockpiles in the U.S. and globally. This was compounded by weaker-than-expected gasoline demand in the United States. Each week brought successively lower oil prices.
For the current week ended June 16, the weekly supply data was relatively positive. It failed to motivate a price rally, but it did appear to stabilize the downward trend in prices. WTI prices hit a fresh low of $42.05/b on Wednesday before starting to recoup some losses.
The EIA reported a crude stock draw of 2.451 million barrels (MMbbls), plus gasoline stock draw of 0.578 MMbbls. Distillate stocks increased by 1.079 MMbbls.
The Energy Information Administration (EIA) data also reported a bounce-back in gasoline demand during the week ended June 16. Apparent demand had collapsed during the weeks ended June 2 and June 9. During the first two weeks of June, apparent gasoline demand averaged 9,293 thousand barrels per day (kbpd), more than 300 kbpd below the May average of 9,596 kbpd. The new weekly data brought the average demand level up to 9,467 kbpd. This still was 129 kbpd below May’s average demand, but the market could view it as a step in the right direction.
WTI crude prices are in the $42.75/b – $43.00/b range this morning. Prices stabilized yesterday and ended with a slight gain, closing at $42.74/b. WTI opened at $42.80/b today, up by 25 cents, or 0.59%, above yesterday’s opening price. Prices have been steady overnight. WTI is currently $42.79/b, up by 5 cents from yesterday’s closing price.
Diesel opened at $1.3721/gallon this morning. This was an increase of 1.02 cents (0.75%) above yesterday’s opening price. Current prices are $1.3665/gallon, down by 0.51 cents from yesterday’s closing price.
Gasoline opened at $1.4369/gallon today. This was a significant recovery of 2.57 cents, or 1.82%, from yesterday’s opening. Prices are $1.4316/gallon currently, down by 0.29 cents from yesterday’s close.