Petrol prices to drop as Middle East supply fears ease
Petrol prices are expected to fall at the bowser as crude oil trades near a three-month low and supply concerns over the Israeli-Palestinian conflict spreading regionally abate.
While prices surveyed by Australia’s National Roads and Motorists’ Association showed average regular unleaded prices had risen 21.9¢ per litre to the top of the cycle as of Saturday, it forecast bowser prices to fall to the mid-180¢ per litre in the next four to five weeks. The average price for Sydney last week was 216.3¢.
Petrol prices are expected to fall in cities such as Sydney in the coming weeks. Bloomberg
NRMA spokesman Peter Khoury said prices in some cities, including Sydney, were hitting the top of their cycle as wider geopolitical tensions in the Middle East had eased.
“There were concerns that if the situation became a regional conflict that oil prices would skyrocket, but we weren’t of that view that we hadn’t seen anything of the sort,” Mr Khoury said.
With the concerns beginning to subside, Mr Khoury added that it was back to “business as usual”.
“We’re still seeing some slight fluctuations but were back where we were when the conflict first started,” he said.
On Wednesday, oil held near a three-month low as an expected decline in US gasoline consumption became the latest indicator to suggest the demand outlook was worsening, according to Bloomberg.
Global benchmark Brent crude edged higher toward $US82 a barrel after plunging 4.2 per cent on Tuesday, while West Texas Intermediate was near $US77. American gasoline demand is expected to drop to a 20-year low next year on a per-capita basis, according to a US government report, with prices at the pump and inflation likely causing a reduction in discretionary driving.
OPEC still positive
Crude inventories at the key hub in Cushing, Oklahoma, increased by 1.1 million barrels last week, the industry-funded American Petroleum Institute reported Tuesday. If confirmed, that would mark the biggest increase since June. The Energy Information Administration will release the next official batch of data on November 15.
Meanwhile, OPEC+ said it was still positive on the demand outlook as it prepares for its next ministerial meeting at the end of the month. Saudi Arabia and Russia may decide whether to extend voluntary supply cuts into 2024 at the gathering.
There are also worries over the strength of the economy in China, the world’s biggest importer, and fresh doubts on whether the US Federal Reserve has finished raised interest rates after a number of officials on Tuesday suggested that there may be more work to do to tame inflation.
On the supply front, Russian shipments are near a four-month high, while US crude stockpiles increased by almost 12 million barrels last week.
The growing bearishness is also being reflected in the futures curve. WTI’s prompt time spread is now just US10 cents a barrel in backwardation where near-term cargoes are more expensive than later-dated ones. That’s down from more than $US1 last month.
“The market is clearly not as tight as many were anticipating,” Warren Patterson, head of commodities strategy at ING Groep told Bloomberg. “That has coincided with easing concerns over potential Middle Eastern supply disruptions and sentiment turning more negative.”
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