After a larger-than-expected inventory increase last week, There are concerns about a tight market. Gasoline futures continued to decline and fell to below $2.5 per gallon. Getting closer to a five-week low reached below $2.4 earlier in the week.
In contrast to market estimates for a modest 383,000-barrel increase. The most recent EIA data revealed that US gasoline stocks increased by 3.058 million barrels in the week ended November 18th. The largest weekly increase since mid-July. The survey also revealed a 625,000 barrel drop in gasoline production, the first weekly decline since early October.
A catalytic impact was the more complicated and indirect effect. The oil crisis allowed the Russians a chance to exact revenge on the nation that had been trying to destroy their economy with sanctions since 2014. The Nord Stream 2 proposal for a gas pipeline from Russia to Germany was seriously attempted to be killed by the US, who went too far in their actions. The US chose to halt the project in its tracks by penalizing Allseas, the Swiss-Dutch business employing its 2 ships to lay the pipe, even though almost two thirds of it had already been placed.
Allseas was compelled to halt its operation, but thankfully, Russia had one ship that could lay this pipe, and the project will continue, albeit more slowly and at the expense of Russia. It was an overt attempt to get Germany to purchase US LNG at a price significantly higher than Russian gasoline. This was labeled an unfair trade practice by Germany and the EU. Russia envisions a multipolar world in which each nation’s sovereignty is upheld and acknowledged in full. He is vehemently opposed to the US policy of invading or entering nations with unfavorable governments. He therefore supports Iran and Venezuela along with China.
Russia was itching for vengeance as a result of Washington’s overbearing actions. So when the oil crisis broke out, it chose to strike the US where it hurts. By breaking its promise to OPEC to reduce output, which led to a crash in oil prices. After that, Saudi Arabia dropped its promise and started pumping unrestrictedly. The price dropped to below $30 a barrel before rising to $37 the next day. Due to the break-even price of $50/barrel for shale oil drillers in the US, there have already been frequent reports. Major US oil businesses are going bankrupt. The issue has been that shale oil extraction required fracking, which is not only a costly procedure but also causes the wells to last for a relatively limited time, necessitating the drilling of new wells quite frequently.