WTI crude prices have dropped sharply to under $48.50/b this morning. WTI opened at $48.75/b today, a major drop of $2.50, or 4.88%, below yesterday’s opening price. Current prices are $48.42/b, a continued decline of $0.48 below yesterday’s closing price. Crude and product prices plunged following the OPEC meeting in Vienna yesterday, despite the fact that OPEC agreed to make the nine-month extension to the production cut agreement. This morning, crude prices are bouncing along a rocky floor of $48.20-$49.10/b.
Diesel opened at $1.5471/gallon this morning. This was a drop of 6.05 cents (3.76%) below yesterday’s opening price. Current prices are $1.5341/gallon, a decrease of 1.68 cents from yesterday’s closing price.
Gasoline opened at $1.6105/gallon today, a significant drop of 4.43 cents, or 2.68%, from yesterday’s opening. Prices are $1.6020/gallon currently, down 0.73 cents from yesterday’s close.
Market prices have been volatile all week, as OPEC and non-OPEC members met in the days leading up to yesterday’s formal session, and various announcements were made. The announcements were generally confident and constructive. However, as noted earlier, this suggested that anything other than stellar results from the final agreement would disappoint the market.
In many ways, the formal session was expected to merely formalize the nine-month extension that had already been announced as a consensus position. Many traders hoped for even more dramatic results, such as deeper and more immediate cuts. Yet OPEC did exactly what it had hinted that it would do. The end result was that the buying turned to selling. The price gains seen this week during the leadup to the meeting vanished.
Oversupply concerns remain as before: the fact that OPEC members Libya and Nigeria remain exempt from cuts and have announced their determination to expand production, the possibility that come of the participating OPEC-NOPEC members will gradually reduce compliance with the agreed cuts, and the trend of rising crude production from other crude producers, chiefly the United States.