Energy
Wednesday, December 6th, 2023 5:28 pm EDT
Key Points
- Oil Price Decline: U.S. crude experienced a nearly 4% decline, with West Texas Intermediate (WTI) for January dropping $2.80 (3.87%) to $69.52 per barrel. Simultaneously, the Brent contract for February fell $2.68 (3.47%) to $74.52 a barrel. This marks the lowest levels for both U.S. crude and the global benchmark since June.
- Impact on Gasoline Prices: Retail gasoline prices in the U.S. followed the downward trend in oil prices, hitting an average of $3.22 per gallon, the lowest since January 3, according to AAA. This decline comes ahead of the holiday shopping and travel season.
- OPEC+ Efforts and Market Skepticism: Despite efforts by OPEC+ to boost oil prices, promising supply cuts in the first quarter of 2024, both U.S. crude and the global benchmark have continued to decrease. OPEC+ members, including Russia and OPEC nations, announced voluntary production cuts of 2.2 million barrels per day for the first quarter of the upcoming year. However, skepticism among oil traders persists, with concerns about the ability of OPEC+ to deliver on these promised cuts and uncertainties about the global economic outlook, particularly related to the Chinese economy. Reassurances from Saudi Energy Minister Prince Abdulaziz bin Salman and Russian Deputy Prime Minister Alexander Novak have not alleviated market concerns, contributing to the ongoing decline in oil prices.
U.S. crude experienced a nearly 4% decline, reaching its lowest point since June, with West Texas Intermediate (WTI) for January dropping $2.80 (3.87%) to $69.52 per barrel. Simultaneously, the Brent contract for February fell $2.68 (3.47%) to $74.52 per barrel. This decline occurred despite efforts by OPEC+ to bolster prices by committing to supply cuts in the first quarter of 2024. The slump has been driven by increased crude production from nations outside OPEC+, particularly the U.S., and concerns about the Chinese economy. Moody’s recent downgrade of China’s government credit rating to negative further contributed to market pessimism.
Retail gasoline prices in the U.S. mirrored the downward trend in oil prices, hitting an average of $3.22 per gallon, the lowest since January 3, according to AAA. This drop in prices comes ahead of the holiday shopping and travel season. Despite falling U.S. crude prices, crude inventories decreased by 4.6 million barrels for the week ending December 1, and gasoline supplied to the market increased by 260,000 barrels per day, suggesting higher demand.
OPEC+ members, including Russia and OPEC nations, announced voluntary production cuts of 2.2 million barrels per day (bpd) for the first quarter of the upcoming year after failing to reach a unanimous agreement on production targets. While Saudi Energy Minister Prince Abdulaziz bin Salman and Russian Deputy Prime Minister Alexander Novak attempted to reassure the market by suggesting the possibility of extending or deepening the promised cuts, oil traders remain skeptical. Tamas Varga, an analyst with PVM Oil Associates, noted that these reassurances have seemingly “fallen on deaf ears” as uncertainties persist, contributing to the continued decline in oil prices.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/12/06/us-crude-drops-below-70-per-barrel-gas-prices-fall-to-11-month-low.html
