Oil Prices Expected To Continue To Drop As Uncertainty Remains
Oil prices traded slightly higher in Monday's action, as investors tried to shake off fears of weaker demand into winter. West Texas Crude traded around $87 per barrel , up slightly from the weekend. While oil prices have edged higher as of recent, Patrick DeHaan says that's not a guarantee as we look to the weeks ahead. He noted investors continue to be nervous that economies across the globe are not as healthy as many would like to see.
"That could certainly send oil much lower, a potential slowdown that could lead to less oil consumption. In addition, China continues to lock down various cities to respond to COVID which also acts to curb consumption."
According to the Department of Energy, U.S. emergency oil stocks fell 8.4 million barrels, to 434.1 million barrels, last week, its lowest level since October 1984. Back in March, President Biden announced plans to release one million barrels per day over six months from the Strategic Petroleum Reserve to tackle high U.S. fuel prices, which have contributed to soaring inflation. The Administration is weighing the need for further SPR releases after the current program ends in October.
In addition, global oil supply is expected to tighten further when a European Union embargo on Russian oil takes effect on December 5th. Which DeHaan noted will likely have an impact on what we pay at the pump in the U.S.
"Gas prices should continue inching down, but diesel prices could continue edging higher in the weeks ahead."
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