The Energy Information Agency has finally updated “on road” diesel prices after a month of frozen data [SEE HERE].  Conspicuously, the technical “glitch” correction is resolved [statement here] as the price for diesel starts to drop a little.

Oil prices are showing a drop in price, and subsequently gasoline prices are starting to moderate.  Unfortunately, as noted at The Hill, the drop in price is not related to an increase in production, but rather a decline in consumer demand.

WASHINGTON – The price of U.S. crude oil was hovering around $98 per barrel on Wednesday afternoon, down from about $108 late last week. Brent crude fell to about $101 per barrel, down from about $111 late last week. 

[…] “We’re on the cusp of seeing more savings,” said Patrick De Haan, head of petroleum analysis at gas price tracking site GasBuddy. “I’m trying to be a little bit optimistic here that this relief could make its entire way to the pump in the weeks ahead.” 

[…]  “The average price per gallon could fall 40 to 65 cents over the coming weeks,” he said, adding that the drop could be over a three- to six-week period. 

“Stations are getting lower prices already,” he added. “Prices could go down a penny or two every day or two for the next six weeks as long as nothing changes.” 

Experts say the decline is a double-edged sword, since the cheaper price isn’t due to any real changes on the supply side but rather to consumers scaling back their expenses and pulling down the expectation of demand.  (read more)

With factory demand dropping precipitously, claims for unemployment starting to increase, consumers being squeezed by continued inflation in energy, gasoline, food and housing, we would expect to see a drop in oil prices for all the wrong reasons.   Supply is not increasing, consumers are cutting back on all activities, including driving.   A recession always leads to lower oil prices.

This information comes on the heels of Reuters publishing an explosive article about oil from the Strategic Oil Reserve being released and sold to foreign countries rather than used for refineries in the United States.

(Reuters) – More than 5 million barrels of oil that were part of a historic U.S. emergency reserves release to lower domestic fuel prices were exported to Europe and Asia last month, according to data and sources, even as U.S. gasoline and diesel prices hit record highs. (read more)

 

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