Oil prices continued to decline throughout December, briefly falling below $70/barrel. This was welcome news for consumers as they would have more spending money on holiday presents due to fuel prices continuing to fall. The following graph shows the daily price movements over the past three months:
By mid-month, oil prices were just below $69/barrel, the lowest level we have seen since the end of June. Even with OPEC+ vowing to cut production by 2.2 million barrels per day through the first quarter of 2024, we have seen inventory builds and little to suggest that demand will outpace supply.
The graphs below show the movement of crude oil (converted to gallons) along with wholesale and retail fuel prices over the trailing 15 months:
Diesel and gas prices have steadily declined since October. In December, diesel wholesale was slightly quicker to drop than retail, resulting in larger profit margins for suppliers. While gasoline wholesale and retail also declined, retail’s dip was steeper than wholesale this month, causing profit margins to be marginally lower. The following graph shows the retail margins over the trailing 15 months:
According to AAA, gas prices finished at approximately $3.10/gallon in December, a decline of $0.15/gallon compared to last month. Diesel prices were down another $0.24 compared to November finishing at $3.98/gallon in December.
Oil completed December just above $71/barrel. December was a similar month to November with fuel prices falling and the market remaining bearish for the near future. Supply continues to outweigh demand even with OPEC+ attempts to limit production. Winter has been off to a quiet start as far as temperatures and major storms, keeping heating oil demand low, which in turn takes pressure off diesel prices. Looking further ahead, GasBuddy’s Patrick De Haan has predicted diesel prices to fall incrementally in 2024.
Sokolis will continue to monitor the many factors going into fuel prices. We currently anticipate that oil prices will range between $70-80/barrel to start 2024.
