While still elevated, oil prices have dipped slightly, well off the high-water mark we saw back in April. In early Tuesday trade, West Texas was trading lower at $89 per barrel, while Brent Crude was also lower trading around $92 per barrel. Patrick DeHaan with Gasbuddy.com said there are several things helping oil prices.
There Are Several Reasons Oil Prices Have Moved Lower
“We do see some oil still flowing through, or I should say around the Strait of Hormuz, the Saudi pipeline, the east-west pipeline, with a capacity of seven million barrels a day has been fully loaded, since really late March,” DeHaan said. “Saudi’s longstanding contingency plan for keeping oil flowing has been to utilize their backup pipeline, which redirects oil around the Strait into the Red Sea port of Yanbu. That is likely keeping downward or at least some pressure on oil from rising more significantly.”
DeHaan noted oil prices are also being helped by China, which over the past couple of months, reduced its import consumption dramatically, falling from 11 million barrels of oil a day before the war to a little over nine million barrels in April. And DeHaan added those numbers could drop even more in June.
While Oil Prices Drop, There Are Concerns
One of the bigger concerns for DeHaan right now is the U.S. Strategic Petroleum Reserve, which continues to decline roughly 8-10 million barrels weekly.
“That should be concerning because at the end of these releases, by later this year, potentially late summer, the inventory drawdowns are going to be over, and the USSPR will be far less filled,” DeHaan said. “And that is likely going to be somewhat of a concern moving forward because it will put the U.S. in a more vulnerable position if there is another disruption or development like the Strait of Hormuz situation.”
Washington Continues To Have Some Of The Highest Fuel Prices In The Nation
When it comes to fuel prices, DeHaan noted the west coast continues to pay some of the highest prices in the nation, with Hawaii, California and Washington recording the highest gasoline and diesel prices.
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Photo: Glenn Vaagen
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