What Is The Current Crude Oil Price

What Is The Current Crude Oil Price – When Russia invaded Ukraine last spring, energy experts predicted oil prices would reach $200 a barrel, sending shipping and transportation costs into the stratosphere and bringing the global economy to its knees.

Oil prices are now lower than when the war started, down more than 30% in just two months. On Monday, news of a slowing Chinese economy and interest rate cut in China pushed oil prices back down, pushing the US benchmark below $90 a barrel.

What Is The Current Crude Oil Price

What Is The Current Crude Oil Price

Gasoline prices have fallen each day over the past nine weeks, averaging less than $4 nationally, while jet fuel and diesel prices have also declined. That will gradually translate into prices of other items like food and airline tickets.

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But it’s too early to celebrate. Energy prices can soar unexpectedly and then suddenly ease.

China, whose Covid-19 lockdowns have become widespread, will eventually reopen its cities to more trade and traffic, boosting demand. The withdrawal from the US Strategic Reserve ends in November and needs to be replenished. For example, if a hurricane floods a Houston shipping channel and shuts down a Gulf of Mexico refinery for weeks or months, fuel prices could skyrocket.

Such a disaster could wreak havoc on the US and global economy. Because energy prices matter to the price of everything that is exported and produced, be it grain or building materials.

“Oil prices can always present surprises,” said Daniel Yergin, energy historian and author of “The New Map: Energy, Climate and the Clash of Nations.”

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Oil prices could fall further if Iran agrees to a draft new nuclear deal that would boost oil exports by at least 1 million barrels a day, after Iran withdraws its demand to remove the Islamic Revolutionary Guard Corps from the US terrorist list. .

Additionally, many investors and economists predict a recession and reduced demand, while unemployment is low and profits are sustained, with interest rates expected to continue rising.

“I think oil prices are going to go down,” said Sarah Emerson, president of ESAI Energy, an analytics firm. “There are several factors converging at the same time: China cut crude imports in the third quarter, the summer petrol season is over, it is concerned about a slowdown, and supplies are plentiful.”

What Is The Current Crude Oil Price

But he was quick to add, “I’m not saying prices won’t rise again,” pointing to the imminent end of the strategic reserve that the United States is working with other countries to release up to one. A million barrels a day – and Europe will most likely burn oil instead of natural gas during the winter.

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Fuel prices, which consumers see going up and down every day at corner gas stations, play a huge role in economic awareness. “Fuel prices aren’t such a big deal, but if you look at their impact on consumer confidence, it’s probably a proxy for how you think about the world in general,” says Mark Finley, an energy economist at Rice University.

According to a June report by RBC Capital Markets, about 3.5% of all personal spending in the US is on gasoline. Low-income and rural workers, older vehicles with low fuel economy, and those who drive long distances are particularly hard hit by high gasoline prices.

Gasoline prices have a significant impact on consumer sentiment, as they stand out at each gas station. Credit… Gabby Jones of The New York Times

Overall, fuel prices matter less than in the past as people drive cars more efficiently and more recently work from home. But the more people spend on gasoline or diesel, the more they have to spend on everything else.

Oil Prices, Low Carbon Energy, And Climate Policy

When oil prices fall, heavy spending on industry and agriculture, including chemicals and fertilizers, usually follows. Shipping is more economical. However, when it rises sharply, as in 2008 and 1970, it raises other prices and shrinks the entire economy. And political fallout is frequent.

Energy price forecasting is always a fool’s game, as there are many factors involved, including the expectations of traders buying and selling fuel, the political fate of volatile producing countries such as Venezuela, Nigeria and Libya, and the investment decisions of governments and private oil producers. . . company executives.

“(When) will the oil bulls start revising their forecasts?” That’s the headline of the latest Citigroup product report. With a global recession imminent, he said, “Which is more likely: a strong hurricane season with oil prices rising? A rebound in Iranian barrels or a recession with oil prices reaching $60 by the end/early of the year? ?” he said. If the price of oil falls to $60 a barrel, the average price of gasoline in the US will drop at least another $1 per gallon.

What Is The Current Crude Oil Price

However, days after Citi’s forecast, Goldman Sachs Commodities Research predicted that prices would rise as demand for fuel increased. “There is a risk of rising commodity prices against a backdrop of sustained growth, low unemployment and stable household purchasing power,” the report concluded.

Real Adjusted Oil Prices Since 1861

Since Russia normally supplies one barrel for every 10 barrels a day in a world market of 100 million barrels a day, the war in Ukraine remains a significant variable in terms of global supply. After the invasion of Ukraine, Russian exports fell by about 580,000 barrels per day. European sanctions on Russian oil were slightly tightened in February, which is expected to reduce Russian exports by 600,000 barrels per day.

As Russia tightens its control over natural gas sales to Europe in retaliation for counter-sanctions, European utilities will have to burn more oil to replace gas.

Energy markets are sending mixed signals. The Organization of Petroleum Exporting Countries (OPEC) said in its outlook last week that it expected the economy to be weaker than expected this year and next. But Cartel expects global demand to rise to 103 million barrels per day in 2023.

A tanker truck in Menton, Texas. The US supplies more than one-third of global gasoline demand. Credit… Ivan Pierre Aguirre of The New York Times

Visualizing Historical Oil Prices (1968 2022)

Supply is gradually increasing as production in Guyana, Brazil and the United States increases. Saudi Arabia and other Persian Gulf countries are following suit, though not as much as the Biden administration would like. Partners including OPEC and Russia promised to increase production by 600,000 barrels per day in July and August, but fell short of their targets.

The outlook for refining, which could lower the price of gasoline and other fuels, is also improving. In recent years, refining capacity has declined in Europe and the United States, but has increased in the Middle East, Latin America, Asia and Africa.

Another factor is relatively low demand in the US, which accounts for more than a third of global gasoline demand. The summer driving season typically boosts consumption by 400,000 barrels per day from Memorial Day to Labor Day. But according to JPMorgan Commodities research, gasoline demand this summer has so far been around the average for April.

What Is The Current Crude Oil Price

This trend may change as the price declines. According to the Department of Energy, Americans increased their gasoline consumption by 508,000 barrels per day last week. Consumption remains above 300,000 barrels per day a year ago.

Oil Prices As An Indicator Of Global Economic Conditions

Then there’s the big shift away from fossil fuels. Many energy investors are skeptical about the future of oil-based transportation, saying prices will drop in the long run.

“Demand for electric vehicles is growing,” said Daniel Sperling, a transportation expert at the University of California, Davis. “It signals a lot. There are three main bchmarks: West Texas Intermediate (WTI), Brt Bld and Dubai Crude. The OPEC Reference Basket is used by OPEC, Tapis Crude is traded in Singapore and Bonny Light is used in Nigeria. Urals Oil is used in Russia and the Isthmus of Mexico is also known Other bleeds The ergy Intelligence Group publishes a handbook identifying 195 major crude oil streams or bleeds in a 2011 edition.

There will always be a spread between WTI, Brt and other oils due to their relative volatility (higher API weights are more valuable), sweet/sour (lower sulfur is more valuable) and transportation costs. It is price that governs the price of the global oil market.

West Texas Intermediate is primarily used in the United States because it is light (API gravity), sweet (low sulfur), and suitable for producing products such as low sulfur gasoline and low sulfur diesel. It’s not as light or sweet as the Brt WTI, but it’s still there.

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