Crude oil prices and related exchange traded funds plunged Wednesday, with gasoline prices easing, as Americans cut back on the traditional summertime road trip.
On Wednesday, the United States Oil Fund (USO), which tracks West Texas Intermediate crude oil futures, and the United States Brent Oil Fund (BNO), which tracks Brent crude oil futures, were both down 3.1%. WTI crude oil futures were down 3.7% to $91.0 per barrel, and Brent crude futures fell 3.4% to $97.1 per barrel.
Meanwhile, the United States Gasoline Fund (UGA) decreased 4.1% on Wednesday while Nymex RBOB gasoline futures were 4.3% lower to around $2.9242 per gallon.
According to Energy Information Administration data, the four-week average U.S. gasoline consumption rate fell over 1 million barrels per day under pre-COVID-19 levels, reflecting a drastic shift in American travel habits in face of elevated energy costs, Bloomberg reported.
OPEC members only agreed to increase their total production by about 100,000 barrels per day in September, the Wall Street Journal reported. In comparison, the cartel previously agreed to expand output by 648,000 barrels per day in July and August.
“From a global balance perspective, today’s minuscule quota increase — the smallest since 1986 in absolute terms and smallest ever in percentage terms — is noise,” Bob McNally, president of Washington-based consultant Rapidan Energy Group and a former White House official, told Bloomberg. “Though, if pump prices keep falling, the White House will likely claim credit.”
While demand has been receding in response to rising fuel prices, the oil markets won’t be seeing much pressure on the supply side. After President Joe Biden visited the Middle East, the Organization of Petroleum Exporting Countries only executed a modest rise in oil production to pay lip services to growing calls for more supply to help ease energy costs.
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