Oil Investors Concerned About Economic Health As 4th Quarter Starts
Oil prices continue the slow drop we’ve seen throughout much of the summer, with prices for West Texas Crude trading around $90 per barrel in Monday’s action. Patrick DeHaan with Gas Buddy said prices continue to drop because investors have so many unanswered questions when it comes to the health of economies across the globe.
“Right now, I think investors are just really concerned about the Federal Reserve which has raised interest rates at a really aggressive pace and what that could do to slow the U.S. economy down. And then, at the same time, China has locked down portions of its largest cities due to COVID which immediately stifles consumption. So, while we’re not out of the woods and supply yet, that is U.S. gasoline, diesel, and oil supply remains tight, I think the market has become very focused on the potential for economic slowdown.”
DeHaan noted American consumers could see price movements at the local station in the coming months, but he’s hopeful most of that action is behind us.
"We are now entering a time of year where gasoline demand tends to go down, so gas prices have been seeing a break, but the same can’t be said about diesel. The national average for diesel is up about eight cents in the past week, and it’s starting to go up, ahead of winter where we see heating oil demand go up, diesel starting to act as a substitute to natural gas, especially in Europe.”
While prices have been dropping for weeks, that could soon change. OPEC announced over the weekend plans to trim oil production in October in an effort to stop the drop in prices which first started in June.
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