During the New York session on Wednesday (December 6), the two major international crude oil benchmarks both fell by more than 3%. Among them, the US WTI crude oil futures price fell below the key integer mark of $70 for the first time in more than five months.
According to specific market conditions, the price of US WTI crude oil futures for January 2024 delivery on the New York Mercantile Exchange fell by about 3.5% to 69.46 US dollars per barrel, the lowest level since June 30, down more than 26% from the peak during the year in late September.
Meanwhile, London Brent crude oil futures for February 2024 delivery fell 3.3% to 74.75 US dollars per barrel, which is also at a low level since June 30, down more than 22% from the high point during the year.
Meanwhile, as of Wednesday, the average price of gasoline at US gas stations reached $3.22 per gallon, the lowest since January 3, according to the American Automobile Association (AAA). The New York Stock Exchange's RBOB gasoline futures also plummeted by more than 3.7%.
Shortly before publication, data released by the US Energy Information Administration (EIA) showed that in the week ending December 1, US gasoline inventories exceeded expectations by 5.42 million barrels, far higher than market expectations of 1,027 million barrels. The previous day's API data also showed that gasoline inventories increased by 2.83 million barrels, more than double the market's expectations.
As gasoline prices declined before the peak holiday shopping and tourist season, the market is concerned about the future of the US economy. Dennis Kissler, senior vice president of trading at BOK Financial, believes that demand for fuel has been disrupted. Kissler pointed out that the current market is more focused on demand than supply.
Last week, several OPEC+ member states announced that they will continue to voluntarily cut production in the first quarter of next year, with a total reduction of 2.2 million barrels per day. However, the analysis points out that OPEC+ announced “voluntary production cuts” rather than “collective production cuts,” reflecting internal differences and raising questions about “whether member states will follow up and implement production cuts.”
Yesterday, Russian Deputy Prime Minister Novak said that OPEC+ may take further measures if last week's agreement is insufficient to balance the market. Novak and the Saudi energy minister together assured the market that they could extend or even further reduce production.
In response, PVM Oil Associates analyst Tamas Varga said that these guarantees have been treated as a byword by the market. OANDA analyst Craig Erlam also said, “Obviously, traders are bearish. Now oil prices have returned to a five-month low and will fall for the fifth day in a row.”
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