Crude oil prices leaped higher again this week. But we don’t think the rally has much longer to run. Over the past two weeks, benchmark U.S. crude has risen from $42 per barrel to $48, largely on rumors of a move by OPEC to rein in production and, more recently, some weakness in the U.S. dollar. Conspicuously missing: any sign of stronger demand or falling supply, which is what is really needed to reduce the glut of oil in storage tanks around the world.
In fact, the supply situation for oil could get worse in coming weeks. The busy summer driving season in the U.S. has only about two more weeks to go. And in autumn, refineries often slow down for scheduled maintenance work, which reduces their need for oil.
Plus U.S. energy firms are putting more drilling rigs to work, which suggests that output could start to creep higher soon. Meanwhile, global economic growth doesn’t look brisk enough to cause a significant uptick in world oil demand.
We continue to expect WTI to trade from $40 to $45 per barrel in September, off a bit from today’s price.
Gasoline prices managed to climb a penny per gallon from a week ago. But we look for pump prices to resume their summer slide fairly soon. The national average for regular unleaded, now $2.14 per gallon, should close out the summer around $2. Diesel, averaging $2.31 per gallon, figures to decline by a nickel or so by late September.
Natural gas prices are treading water, with the benchmark gas futures contract trading at $2.60 per million British thermal units, practically unchanged from a week ago. Gas demand is strong, and U.S. output is slowly falling.
We continue to expect WTI to trade from $40 to $45 per barrel in September, off a bit from today’s price.
Gasoline prices managed to climb a penny per gallon from a week ago. But we look for pump prices to resume their summer slide fairly soon. The national average for regular unleaded, now $2.14 per gallon, should close out the summer around $2. Diesel, averaging $2.31 per gallon, figures to decline by a nickel or so by late September.
Natural gas prices are treading water, with the benchmark gas futures contract trading at $2.60 per million British thermal units, practically unchanged from a week ago. Gas demand is strong, and U.S. output is slowly falling.
But that hasn’t been enough to completely whittle down the glut of gas held in storage. And barring any extreme late-summer heat, demand will probably cool off as summer ends. We continue to look for gas to trade near $2.60 per MMBtu in coming weeks.
By: Jim Patterson (Kiplinger).
Photo: Business Times, Singapore.
Review: Emerging Market Formulations & Research Unit, FLAGSHIP RECORDS.
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By: Jim Patterson (Kiplinger).
Photo: Business Times, Singapore.
Review: Emerging Market Formulations & Research Unit, FLAGSHIP RECORDS.
For The #FacebookTeam