Petroleum futures sold off Tuesday morning and brought prices toward levels well below where they were just before and after the Hamas attack on Israel
last month.
While geopolitics remain a concern, it appears the typical fall seasonal downtrend is back in place.
Downward momentum was started by the Brent contract, which dropped through support levels and the previous low of $83.55 (Oct. 6). Heading into midday, front-month Brent was trading at $82.39/bbl, the cheapest price since Aug. 24 and a decline of $2.79 trading near the lows of the day.
According to a recent note for clients from ICAP technical analyst Walter Zimmerman, the typical seasonal peak-to-trough in Brent is a 27% decline, which would target a bottom in the low $70s.
West Texas Intermediate is also down more than $2 but is still hovering above the more critical support levels. WTI bottomed at $77.98 recently and, like Brent, is at the lowest level since late August. The contract has struggled to get much of a bounce off the lows, last trading at $78.09/bbl, off by about $2.75.
Of the refined products contract it is the ULSD contract taking on the bigger selloff with December futures off by more than 10cts as prices are essentially back to where they were before the Hamas attack on Israel. At midday, front-month ULSD losses were hovering just inside of 11 cents at $2.8436/gal.
The RBOB contract had fallen by just over 6 cents at midday to most recently trade at $2.1739/gal with a minimal bounce off the $2.1654/gal low. It is fairly common to see spot gasoline prices throughout the U.S. down 5-7cts/gal, but the Pacific Northwest has seen a narrowing discount offset a chunk of the paper declines, with prices off by less than a cent.
For the time being, no market is threatening to fall below the $2/gal level other than the Gulf Coast, which sees CBOB currently below that mark and closing in on some of the lows of the year which were set about a week ago.
This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.
–Reporting by Denton Cinquegrana, [email protected]; Editing by Michael
Kelly, [email protected]
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