Crude Oil Slumps to Lowest Level Since June

Facts

• West Texas Intermediate, the US crude oil benchmark, declined 4.07% on Wednesday to settle at $69.38 a barrel — the lowest level in five months. Meanwhile, retail prices hit $3.22 a gallon, the lowest since Jan. 3.¹
• Future prices for the benchmark traded about 90 cents higher for deliveries scheduled next July, compared to oil set to be delivered in January 2024, reportedly owing to concerns that the market is oversupplied due to US crude oil production reaching near record-highs.²
• Though commercial crude oil inventories have declined for the first time in seven weeks, gasoline inventories increased more than expected — prompting speculation that weakening demand could lead to oversupply.³
• Meanwhile, global benchmark Brent slipped below $75, marking the fifth day of decline for global crude prices despite efforts — including the extension of voluntary cuts — from OPEC+ to drive the market higher.⁴
• This comes after Russian Pres. Vladimir Putin arrived at Riyadh, the world's largest crude exporter, where he is expected to discuss oil with the representatives of Middle Eastern countries.⁵
• Russia — the only member of OPEC+ to contribute to export cuts rather than output cuts to curb supplies — has pledged more transparency about the volume of its fuel refining and exports.⁶

Sources: ¹CNBC, ²MarketScreener, ³The Wall Street Journal, ⁴Financial Times, ⁵Al Jazeera and ⁶Reuters.

Narratives

• Republican narrative, as provided by FOX News. The Biden administration has consistently released millions of barrels of oil from the Strategic Petroleum Reserve in a short-sighted bid to reduce prices at the pump in the near term, leaving the country vulnerable to potential energy threats. A true American leader would be focused on ramping up oil output capabilities, especially while prices remain high now and OPEC+ cuts some production.
• Democratic narrative, as provided by Axios. Though one may not expect Biden to boast that his administration has achieved record levels of American oil production — currently the world's highest — as he has sought to strike a fine balance between energy and climate change, it's a matter of fact that the measures he has taken to help American families have successfully forced down gas prices.

Predictions