DeHaan: Oil Prices Dropping On Economic Weakness in China, Europe

After trading higher last week, thanks to Iran's attack on Israel, oil prices have fallen again.  In Monday’s trade, West Texas Crude was trading around $74 per barrel, while off from last week’s numbers, still higher than the prices we saw during most of September.  Patrick DeHaan with Gasbuddy.com says one of the main reasons for the drop in price. OPEC predicting that oil demand will not be as strong in the coming year as anticipated.

“OPEC revised down its forecast because of weakness in the Chinese economy and also weakness in the global economy," DeHaan noted.  "Germany now looking at officially entering recession.  So, we're seeing some of this weakness spread across the globe. There have been questions. Whether or not the U.S. economy will slip into a recession.  For now, it's looking like we may not.  But other countries are, and that's having a negative impact on global oil demand.”

When it comes to the weeks and months ahead, DeHaan says he expects gasoline prices to fall modestly through the end of the year.

“And that could be subject to Middle East tensions because there always is the possibility that Iran could attack Israel and Israel could retaliate," DeHann continued.  "The expectation for gasoline is negative, meaning that we do expect that through most of these outcomes, gasoline prices tend to decrease between now and the end of the year.  Whereas diesel prices are likely to trend upward and that's because heating oil demand is starting to ramp up as temperatures drop.  Diesel prices nationally rose four cents a gallon last week. So, between now and the end of the year, we expect diesel prices to modestly increase, while gasoline prices will modestly decrease.”

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