The sun may be shining in the wake of Jonas, which left the mid-Atlantic and the eastern shore buried in snow, ice, or floodwater, yet oil resumes its “new-year” downward trend after a two-day rally. Late last week, WTI oil had its biggest rally in more than seven years, +21% after the Feb contract expired Wednesday, but insight into Saudi Arabia’s spending on energy projects coupled with China’s continued drop in diesel demand has pushed the market downward this morning. WTI is currently trading -$1.48 at $30.71 and both final products, heat and RBOB, can be seen down $.0483 and down $.0259 respectively. With a record-setting winter storm behind us, and a week filled with economic news upon us, what the market will do is questionable to say the least.
Just a week ago, the EIA came out with yet another short-term energy outlook. To delve deeper into the information you can go to: http://www.eia.gov/forecasts/steo/. One of the takeaways worth mentioning is the U.S. retail gasoline forecast, which is speculated to drop to a seven-year low of $1.90 this February, before rising during the spring to bring the 2016 average to $2.03/gallon. Also, U.S. crude oil production is forecasted to decrease from 9.4 million barrels/day in 2015 to 8.7 million barrels/day this year, possibly closing the gap between supply and demand, which could potentially lift the price of crude. If you have time, browse through this energy outlook, as it is the first one that has forecasts for 2017.