Crude oil opened October at $62/barrel, with ongoing concerns about OPEC+ production increases pushing prices down to $60 within the first few trading days of the month. Prices rebounded slightly in the following days when OPEC+’s output hike of 137,000 bpd turned out to be relatively modest when compared to some of the loftier projections of 500,000 bpd or more. Oil reached its high point of the month on October 8, inching within striking distance of $63/barrel on the backs of lower-than-expected domestic inventory. However, over the following week and a half, oil would embark on a long, slow slide, falling well below the $60 mark. The following graph shows the daily price movements over the past three months:
Concerns about oversupply continued to haunt the marketplace, amplified by Russia declaring their plans to boost production despite the Trump administration asking India, Japan and other nations to slow or eliminate Russian imports. The International Energy Agency also added to the bearish case for oil, projecting starkly lower demand growth in 2026 in its October report. By the 16th, oil reached its nadir for the month of October, falling all the way down to $57/barrel. Relief came fast, however, with drops in domestic crude and refined product inventories helping oil quickly rebound above $60 within the next few trading days, with prices climbing back to the $61 mark on October 23 thanks to new sanctions on Russian oil. These sanctions, along with falling U.S. inventories at the Cushing, OK settlement point, helped to somewhat alleviate concerns of oversupply and keep oil cruising just barely above the $60/barrel line as October came to a close.
The graphs below show the movement of crude oil (converted to gallons) along with wholesale and retail fuel prices over the trailing 15 months:
In October, retail diesel margins dropped to $0.52/gallon. However, Gasoline retail margins leapt to $0.41 cents/gallon, as a decline in wholesale prices continued to outpace price drops at the pump. The following graph shows the retail margins over the trailing 15 months:
According to AAA, the national average retail price for gas dropped markedly in October, falling to $3.06, even as retail marketers enjoyed better margins. The national diesel retail average fell from $3.75 to $3.68 in October, matching usual seasonal trend lines.
WTI crude wrapped up October at $60/barrel, down -2.4% over September’s closing mark. Oil continued its overall downward trend for calendar 2025, now down 15% YTD since January 1st.
For the near future, Sokolis projects that oil prices will range between $57-$65, as the market continues to wrestle with a great deal of fundamental uncertainty regarding oversupply and OPEC+ output hikes, as well as soft demand and ongoing geopolitical tensions. However, some interesting narratives have emerged recently, particularly around freefalling domestic crude inventories, and the emerging potential for armed conflict in Venezuela could also cause a modest reaction in the markets. Ultimately, weak fundamentals surrounding oversupply and soft demand will likely keep traders in a bearish mindset as we enter the last two months of 2025. The fuel pricing experts at Sokolis will continue to keep an eye on the markets and keep you informed.
