Oil Weakness Continues Into 2019, Though Some See An Upside
Ellen R. Wald, Ph.D | Jan 03, 2019 06:05AM ET
Oil prices opened in 2019 significantly lower than where they were on January 2, 2018. WTI started off at $45.81, 24% below where it started on the first day of trade in 2018. Brent opened at $45.15, 19% lower than where it began 2018.
On the bright side, both of these benchmarks are higher than the Canadian benchmark, Western Canadian Select (WCS), which closed the year at $29.48.
So far, oil markets are proving just as volatile in 2019 as they were in 2018. As markets opened on January 2, oil seemed poised to continue its downward slide. However, prices suddenly turned around and jumped by nearly 3% for both Brent and WTI, before heading back down.
This kind of volatility is the result of two factors. The most important is financial speculation. The second is uncertainty over the health of the global economy in 2019. Both of these factors are driving oil’s spikes and dives at the moment. The good news for traders though, is that there is money to be made (and lost) in this volatility.
There are two individuals who seem unequivocally positive about oil in 2019—but on opposite sides of the coin. Both U.S. President Donald Trump and UAE oil minister Suhail Mazroui took to twitter to express their optimism for oil in 2019. Mazroui is looking forward to higher prices, while Donald Trump is excited about the low gasoline prices American consumers are seeing.
Even though the last OPEC meeting, in December 2018, was essentially a disaster in terms of generating positive sentiment for oil prices, on January 1, Mazroui wrote that he is feeling very positive about 2019.
This is indeed a GasBuddy’s 2019 forecast , the average national price for gasoline will likely be slightly lower than last year’s. However, consumers and traders should be aware that even though gasoline prices are low now, the price of a gallon of gasoline could easily surge to over $3 as soon as May.
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