Analysis by Dr. Nancy Yamaguchi


This week, the oil market this week recouped most of the post-Fourth of July week losses. West Texas Intermediate (WTI) crude opened at $46.08 per barrel (/b) this morning, the highest opening price in seven trading sessions, and up 64 cents from yesterday’s opening value. Prices are $46.44/b currently, down by 5 cents so far today. Oil prices appear likely to end in the black for this week ended July 14, for only the second time since the week ended May 19. As of the time of writing, WTI is up by $2.09/b for the week, diesel is up by 5.56 cents/gallon and gasoline is up by 3.22 cents/gallon.


WTI crude prices opened the week at $44.35/b. WTI opened this session at $46.08/b, an increase of $1.73, or 3.9%, from Monday’s opening. During the week, prices ranged from a low of $43.65/b on Monday to a high of $46.54/b on Friday, a range of $2.89. WTI is $46.44/b currently, up by 36 cents from today’s opening price.



Diesel prices opened Monday at $1.4512/gallon. Diesel opened this morning at $1.494/gallon, a recovery of 4.28 cents, or 2.9%, for the week. Prices ranged from a low of $1.4345/gallon on Monday to a high of $1.5092/gallon on Friday, a price range of 7.47 cents. Diesel prices are $1.5068/gallon currently, up by 1.28 cents from today’s opening price.



Gasoline prices opened Monday at $1.5064/gallon. Gasoline opened today at $1.526/gallon, an increase of 1.96 cents, or 1.3%, for the week. Prices ranged from a low of $1.4759/gallon on Monday to a high of $1.5485/gallon on Wednesday, a range of 7.26 cents. Gasoline prices are $1.5386/gallon currently, up by 1.26 cents from today’s opening.



This week’s price bounce-back seems to offer a reprieve from another extended price slide. The week leading up to the Fourth of July holiday weekend saw a $2.88/b increase in WTI prices, a 9.9 cents/gallon increase in diesel prices, and an 8 cents/gallon increase in gasoline prices. This broke a five-week stint of declining prices. Between the week beginning May 22 and the week ended June 23, WTI crude prices had dropped by $7.80/b.


However, the week ended July 7 was another week in the red for crude and products. This occurred despite fairly solid fundamentals reported by the Energy Information Administration (EIA) for the prior week, including a 6.3-million-barrel (MMbbl) drawdown of crude stocks plus a 3.7-MMbbl drawdown of gasoline stocks.


On Wednesday, the EIA released data for the week ended July 7. U.S. crude stocks were drawn down by 7.56 MMbbls—the largest drawdown of the year. Gasoline inventories were drawn down 1.6 MMbbls. Diesel inventories rose by 3.13 MMbbls. The EIA reported that apparent demand for diesel dropped by 464 kbpd during the week ended July 7.


U.S. and OPEC crude production also continue to rise. Nonetheless, crude prices are seeking a higher average level this week. If today’s trend continues, WTI prices may maintain levels above $46/b.


Federal Reserve Chair Janet Yellen concluded her semi-annual testimony to Congress. Regarding the goal of 2% inflation, Dr. Yellen stated that it was premature to conclude that current inflation trends were not on track to meet the target. The Fed intends to “remain on a gradual path of rate increases.” Upon Dr. Yellen’s remarks, U.S. stocks rose and treasuries fell. The Dow Jones Industrial Average opened with gains Monday – Thursday this week.


U.S. consumer price data has just been released, showing no change in the consumer price index. The forecast had called for an increase of 0.1%, following a 0.1% decline the previous month. Energy prices dropped significantly by 1.6% from the prior month.