Oil and gas prices are trending downwards for a sixth straight day reaching levels not seen since May. A couple thing happened to cause the drop. The number of new Covid-19 cases continue to rise at alarming rates causing consumers to take less driving trips and the Federal Reserve indicated it may slow down its bond and mortgage backed securities (MBS) purchases as inflation rises more than desired and new signs of long term inflation start to appear.
What Texas Intermediate (WTI) dropped 3.6% to $63.08 and new oil commodity contracts are down 8%. Brent Crude also declined 3.2% to $66.02 per barrel. New data from the U.S. Energy Information Administration also revealed that gasoline stocks were higher than expected, meaning the already disappointing summer driver season is already winding down, faster than normal.
Adding to the slowdown is the dollar’s rise in value against other currencies, which makes buying oil harder for other countries since most oil purchases globally are done in U.S. Dollars.