WTI crude prices have just crashed below $48/b. Prices remained stable in the $48.00-$48.50/b range through yesterday and overnight. This morning, they weakened to the low end of this range this morning, and they broke through $48/b just at the time of this newsletter. WTI opened at $48.45/b today, identical to yesterday’s opening. Current prices are $47.71/b, a drop of $0.69 below yesterday’s close.
Diesel opened at $1.5002/gallon in today’s session. This was a drop of 1.14 cents (0.75%) from yesterday’s opening price. Current prices are $1.4864/gallon, a drop of 1.42 cents from yesterday’s close.
Gasoline opened at $1.5802/gallon today, a drop of 1.44 cents, or 0.9%, from yesterday’s opening. Prices are $1.5720/gallon currently, down 0.87 cents from yesterday’s close.
The Federal Open Market Committee will be meeting over the next two days. The market now fully expects an increase in interest rates, following a series of increasingly confident statements and speeches by members of the FOMC, capped by a speech by Fed Chair Janet Yellen. Dr. Yellen noted the progress in job creation, a reduction of the unemployment rate to 4.8%, wage growth, and a gradual increase in the personal consumer expenditures (PCE) price index. Dr. Yellen noted that the Committee’s median assessment in December was that a cumulative ¾ percentage point increase in the federal funds rate would be appropriate over the course of 2017. As always, the FOMC monitors the economic situation and adjusts its assessment as needed.
Winter Storm Stella is bringing heavy snows and strong winds to the Northeast. Blizzard conditions are possible in some areas. Residents are bracing for power outages and travel disruptions. The Great Lakes area is also being hit by lake effect snows.
The EIA has released its data on U.S. Retail Gasoline and Diesel Prices. Gasoline prices fell by 1.8 cents/gallon and diesel prices fell by 1.5 cents/gallon at the national level. Details are presented in our second article today. Note that the current downturn in crude prices has not been fully reflected in retail prices, since the prices reported are for the week ended March 13th. If low prices persist in the coming week, next week’s retail prices should continue to decline.