This week, the Interior Department…
Oil prices are on track…
The spread between Brent crude oil prices and West Texas Intermediate (WTI) hit its widest level in over three years on Monday, with WTI down more than $8 compared to Brent as U.S. gasoline demand falls.
Brent crude was trading at $104.8 on Monday 11:41 EST, while WTI was trading at $96.12, representing a spread of over $8 per barrel.
Brent prices continue to be boosted by tight physical supplies, buoyed by Russia’s war on Ukraine and Western sanctions, as well as a looming European Union ban on Russian oil set to be implemented before the end of this year.
In the United States, WTI is being pressured downward by lowering demand for gasoline, even as prices at the pump are easing slowly.
Gasoline prices in the U.S. have dropped steadily over the past week. On Monday, the national average per gallon was $4.355, according to AAA, down from $4.521 a week ago, with analysts predicting prices under $4 in the near future.
Last week, demand for gasoline saw only a slight increase, while U.S. crude oil inventory saw a large increase of 3.5 million barrels due to low demand. EIA inventory data from last week showed that while gasoline demand increased for the week, it was still lower than this time last year. At the same time, total domestic gasoline stocks increased.
In a note cited by Reuters, OANDA market analyst Jeffrey Halley said that while Brent is outperforming due to tight physical markets, “WTI, on the other hand, is a domestic benchmark meaning that U.S. recession nerves seem to be more heavily weighing on its price".
In the meantime, analysts are anticipating that the Federal Reserve will raise interest rates on Wednesday by three-fourths of a percentage point after June consumer prices gained 1.3%, notching 12-month inflation to an over-four-decade high of 9.1% largely due to the price of commodities.
By Tom Kool for Oilprice.com
More Top Reads From Oilprice.com:
Tom majored in International Business at Amsterdam’s Higher School of Economics, he is Oilprice.com's Head of Operations