Recessionary Fears Tamp Down Crude Prices
October 6, 2023
WTI crude oil prices fell by more than $11 dollars per barrel over the past week driven by increased concerns of a possible recession in 2024, extreme low implied demand for gasoline reported by the EIA for last week, and a poor ADP jobs report for September. On the bullish side are OPEC+ oil output cuts and voluntary cuts of 1,000,000 bpd for Saudi Arabia and about 300,000 bpd for Russia through the end of 2023.
The EIA data this week had crude oil inventories down 2.22 million barrels, gasoline up a big 6.48 million barrels and distillates down 1.27 million barrels. US crude oil production held steady at 12.9 million bpd.
The propane inventory update had stocks down 25,000 barrels to a total of 101.408 million barrels, still near the all-time highs for inventories. Midwest stocks were up 134,000 barrels putting total stocks at 26.759 compared to last year at 24.465 million barrels. Gulf Coast inventories were up 244,000 barrels putting total stock at 59.627 compared to 46.728 million last year.
Russia lifted its export ban on diesel exports which should help to ease some of the supply concerns the ban brought on. Companies are still required to sell 50% of their supplies domestically before exporting barrels. Prices domestically in Russia did come down once the export ban was implemented to help ease prices during their harvest which was a big reason for the ban.
It is being reported that Exxon Mobil is in advance talks to acquire shale producer Pioneer Natural Resources for $60 billion.