Oil prices started November above $80/barrel, but they would not hold there very long. Prices continued their downward trend from October into the $70s, where they would end up spending the rest of the month. The following graph shows the daily price movements over the past three months:
OPEC+ seems keen to keep production cuts in place for the remainder of 2023 and even into 2024. While that should help elevate the price of fuel, things have calmed down in the Middle East for the time being. Any premiums that were added to oil prices due to restlessness with the Gaza conflict are being negated by weakened global demand.
The graphs below show the movement of crude oil (converted to gallons) along with wholesale and retail fuel prices over the trailing 15 months:
Similar to the trend for oil prices, both diesel and gas prices extended the losses seen in October. Diesel wholesale was quicker to drop than retail, creating some nice profit margins for suppliers in November. While gasoline wholesale and retail also declined, retail’s drop was steeper than wholesale causing profit margins to be slightly lower than the previous two months. The following graph shows the retail margins over the trailing 15 months:
Crack spreads fell again in November for the third month in a row. Lower crack spreads can be attributed to lower global fuel demand. See the trailing 15 months in the graph below:
According to AAA, gas prices finished at approximately $3.25/gallon, a decline of $0.23/gallon. Diesel prices were down about $0.24 compared to October finishing at $4.22/gallon in November.
Oil finished November just below $76/barrel. Compared to the rollercoaster with prices we saw in October, November was a pretty calm month for price movements. Looking ahead, rumors from the latest OPEC+ meeting are claiming there could be further “voluntary” cuts to production in 2024 as Saudi Arabia is providing some push to the other members. With the current demand projections, larger cuts from OPEC+ would probably only keep prices from falling further. There would need to be supply issues or further turmoil in the Middle East to see oil prices spike anytime soon.
Sokolis will continue to monitor the many factors going into fuel prices. We currently anticipate that oil prices will range between $70-80/barrel.
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