U.S. Economy Having More Of An Impact On Oil Prices Than Ukraine, COVID-19, DeHaan Says

Oil prices have moderated over the past couple of weeks, allowing fuel prices to flatten or even decrease.  West Texas Crude traded higher in Monday’s action, up by $2 per barrel, but remained below the $100 threshold at $96.

So, why have oil prices, and fuel prices flattened over the past month?

Patrick DeHaan with Gasbuddy said concerns are growing about the state of the U.S. economy and a potential slowdown, which could curb fuel consumption.

“That, and an improvement in supply, gasoline inventories in the U.S. up for four out of the last five weeks, has contributed to the down drafts we’ve been experiencing, and barring any unexpected outages, or hurricanes and such, we could continue to see prices moderating for the next couple of weeks.”

What sort of impact are Ukraine and COVID having on oil prices?  DeHaan said those two issues are not active drivers of prices one way or another.

“The Russian invasion of Ukraine is partially the reason why diesel prices has seen such a significant gap to gasoline, that gap really isn’t changing.  I expect diesel to moderate but it will likely remain very high when compared to gasoline.  On the other hand COVID-19 has played more of an active role and that it has more of a limited refining capacity.  U.S. refining capacity down about 1 million barrels a day, compared to where it was in 2019, and that has curbed the ability for refineries to get as much diesel as the market is looking for.”

DeHaan said he’s hopefully U.S. consumers will continue to see oil prices moderate in the weeks ahead.  But he noted that a lot of volatility remains on the international scene.

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