After the market hit 9-month lows last week, this week brought a return to elevated prices. Crude oil rose back above the $80/bbl level, and diesel prices lept thirty cents above last week’s low. As has been the case for the past few months, the shifting focus from economic woes to physical fuel tightness has been the culprit behind the volatility.
This week, despite ongoing economic concerns, markets were reminded of the fragility of current fuel supplies. Hurricane Ian temporarily disrupted around 4% of America’s oil production, reducing oil supplies. On Wednesday, the EIA reported falling oil inventories and improving fuel demand. Overseas, several French refineries are offline due to labor strikes, taking a sizeable chunk of refining output offline. Following last week’s price drop, OPEC+ is considering production cuts to push markets higher. Together, these stories have reminded traders that oil markets are quite tight currently, regardless of economic woes.
Prices in Review
This week, crude oil opened at $79.23, sinking further during Monday trading. Prices remained lower until Wednesday when the EIA’s report showed an inventory draw that propelled prices above $80/bbl. This morning, crude opened at $81.74, a gain of $2.51 (+3.2%).
Diesel prices followed a similar path, trending lower early in the week until the EIA’s report spurred a rally. Diesel opened at $3.25 on Monday and fell as low as $3.13 by the end of the day. Prices rose from there, hitting near $3.50 on Thursday. On Friday, diesel opened at $3.40, a gain of 14 cents (+4.7%).
Gasoline also rose later in the week, though gains have been less pronounced than for diesel. Opening at $2.41, prices climbed to a high near $2.60 before sinking back. The gasoline market opened at $2.49 this morning, a gain of 8 cents (+3.4%)