Oil Prices Drop to 6 Week Low

TAMPA, Fla., (November 6, 2016) — A major shift occurred in the oil markets last week, suggesting gas prices could soon plummet. Oil prices tumbled to 6-week lows, due to an unexpected record-high build in domestic crude oil inventories. The crude oil forecast has now gone from an imminent $55-$60 a barrel range, to $40 a barrel or below.

Also impacting crude oil prices are lowering expectations that OPEC will agree on a production freeze, in effort to reduce global oversupply. OPEC still has until November 30th to develop a framework, but major oil producing countries like Iraq, Iran, and Russia have shown no interest in cutting production. The price of crude settled at $44.07 on Friday, but a lot could happen in the next few weeks. Prices in the low-40s, could make it more compelling for Saudi Arabia and others to carve out some sort of agreement. Sometime between now and the November 30 meeting, some promises could be made in hopes of stabilizing oil.  If not, oil prices could fall below $40 a barrel. Gas prices should move lower this month, but may not get as low as last winter until the November 30 meeting is finalized.

“Wholesale gasoline prices fell at an incredible rate last week, dropping 20 cents in the Gulf Coast market,” said Mark Jenkins, spokesman, AAA – The Auto Club Group. “Motorists in Florida will likely see pump prices drop a dime or more in the next week or two. Motorists in Georgia and Tennessee should expect similar declines, but it could take a little longer due to the Colonial Pipeline outage.”

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