Crude and gas prices fall on poor US economic indicators
November 17, 2023
Crude oil and gasoline prices fell by more than 4% yesterday which was mainly driven by poor US economic reports this week, US crude oil inventories rising significantly, and a slowdown in China oil refinery throughput.
Yesterday was a bearish day for energy markets as the sentiment seems to have shifted on some weak economic data. Prices are trying to bounce here in early trading. The question is, was yesterday just a technical day that tested the lower end of the trading range after running up to test the top of the trading range? Or was it a sign that prices are weak and in need of more of a seasonal correction. Either way it looks like volatility will be high. Yesterday saw crude down almost 4 dollars and today it is trying to rally up over a dollar. This could also reflect all the uncertainty surrounding these markets.
The following is from Tom Kloza. The US Gulf Coast is the largest bulk gasoline market in the world. Consider this: The closing price yesterday was between $1.85 – $1.86 per gallon. That is the lowest such number since March 2021 representing a 32 month low water mark.
WTI crude oil has seen the first few months move into a contango. The second and third months are higher price than the first month. This is an indication of a well-supplied market as the market is trying to incentivize traders to carry the barrel forward as they will be worth more in the future. It is early in this process and volatility has been high, but this is worth noting. It has also been interesting for me that supplies have been tight and demand good, which has caused the market to be concerned about keeping up but basis values on both Group ULSD and Group Gasoline as have been low for some time now.