WTI crude oil prices and Oct RBOB gasoline prices both increased on October 3; crude oil reached its highest level in 9-1/2 months.
Russia and Saudi Arabia decided to continue reducing their crude oil production.
“Crude Oil and Gasoline Prices: What’s Going On?”
Crude oil reached its highest point happened because Saudi Arabia and Russia said they would keep cutting their crude oil production until the end of the year. Also, people expected that there would be less crude oil available, which made the prices go up. But, the value of the dollar also went up, which limited the gains in crude oil prices.
Saudi Arabia and Russia made a decision to keep cutting their crude oil production. Saudi Arabia will produce 1.0 million fewer barrels per day (bpd) until December. This means they will have the lowest crude oil output in three years. Russia will also cut its production by 300,000 bpd until December. These actions help support the prices of crude oil.
Now, let’s talk about the global economy. Some news is good for energy demand and crude oil prices, while other news is not so good. In the U.S., the Aug ISM services index went up unexpectedly, which is a positive sign. But in the Eurozone, retail sales went down in July, and German factory orders had a big drop. These mixed economic indicators affect how people feel about crude oil prices.
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“Potential Impact of Improved US-Iran Relations on Crude Oil Exports”
There are a few factors that are not so wonderful for the price of crude oil. The price of gasoline and other goods manufactured from crude oil decreased significantly, which is measured by the crude crack spread. This indicates that less crude oil is being purchased by refiners to produce gasoline and other products. Iran has also been shipping a lot of crude oil to China, which increases the supply of oil in the world.
Here’s something else to think about. More Iranian crude oil may be exported if relations between the two countries improve. They just reached an agreement about prisoners and money, which may pave the way for future agreements, such as those relating to Iran’s nuclear program. The United States and its allies may lift restrictions on Iranian crude oil exports if they come to an agreement, which would increase the amount of oil available on the world market.
There are a few additional factors that affect the price of crude oil. In addition to having a large amount of crude oil stockpiled on land, China’s imports of crude oil significantly decreased in July. This indicates a decrease in the demand for oil. Another significant user of crude oil, India, imported less in July. But there is also some positive news. There are now fewer ships carrying crude oil because Russian crude shipments have decreased. The price of crude oil may be supported by several elements.
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