Oil rose above $70 yesterday and managed to sustain that level at closing time, the first time since July that prices closed about $70. That price level is being tested this morning, with prices dancing above and below the $70 line. Crude oil is currently trading at $70.01, a loss of 24 cents.
Fuel prices are mixed, with diesel prices staying relatively flat yesterday while gasoline prices gained nearly 4 cents (likely a delayed reaction to the EIA’s report of record high demand last week). Today, gasoline prices are $2.1449, holding on to positive territory by rising 0.1 cents. Diesel prices, on the other hand, are trading at $2.2546, down 0.3 cents.
Yesterday Trump hinted that the US could withdraw from the World Trade Organization if the group does not “shape up.” Trump claims that the US often loses to other countries in law suits, and that the rules of the organization are unfair to US interests. Independent analysis reported by BBC shows that the US wins 90% of the claims it makes, and loses about that often when complained against.
We’ve noted several times that trade bears a significant impact on fuel prices. First, trade requires shipping goods across vast distances, using fuel along the way. At a more macro level, trade spurs economic activity which leads to overall more fuel demand, boosting prices. If the US were to withdraw from the WTO (forfeiting its place and influence in the international trade order) or significantly reduced its trade with Canada, the economic repercussions would put a large downward push on fuel prices.
Storm activity is beginning to pick up in the Atlantic after a surprisingly quiet summer. While Hawaii experienced a huge hurricane recently, the East Coast has been generally spared from major events so far. Keep in mind, though, that hurricane season is just now nearing its peak.
Conditions in the Atlantic have become more conducive to tropical activity, as evidenced by the arrival of two different systems. A tropical wave currently traveling through the Caribbean is being watched for possible development into a cyclone, though forecasts give it just a 40% probability of forming. Off the coast of Africa, Potential Tropical Cyclone 6 (aka, future Hurricane Florence) is forming off the coast of Africa, and is growing much earlier than most hurricanes. Forecasts show it developing into a powerful hurricane in the coming weeks, but it will likely curve north and avoid landfall.
The historical peak of hurricane activity comes on September 10 – over the past 100 years, over 90% of years have had a hurricane or tropical storm being tracked on those dates. Odds of systems developing remain elevated through mid-October, when they drop below 50%. Although this year could be a quiet year, history is a good reminder that it’s important to be prepared for emergencies.
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This article is part of Crude