What do these 21 states – Texas, Alabama, Arizona, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Missouri, Nebraska, New Mexico, New York, Ohio, Oklahoma, South Carolina, Tennessee and Virginia – have in common? They have joined the US$1.99 club – where at least 1 station sells fuel at less than two bucks a gallon.

 

That’s about 3.78 litre of gasoline for US$1.99, or US$0.53 (£0.41; RM2.22) per litre. And the good news is, it won’t end there – according to Patrick DeHaan, head of petroleum analysis for GasBuddy, a company which helps drivers find cheap fuel. In fact, Patrick said – “Many states will see prices continue to decline.”

 

The tumbling gas prices have hit motorists for a seventh week in a row as the price of gas slides toward yearly lows, and the American drivers aren’t complaining. Since hitting a four-year high near US$77 a barrel at the beginning of last month, oil prices have plummeted about 30%. The WTI Crude briefly breached below US$50 a barrel Thursday.

On Thursday, the U.S. Energy Information Administration (EIA) released a report that says the U.S. crude oil reserves  jumped by 19.5% in 2017 as compared to end of 2016 – reaching 39.2 billion barrels and beating the previous record of 39.0 billion barrels set in 1970, thanks largely to higher prices and continued shale resource development.

 

In 2017, higher prices drove Texas to add 3.1 billion barrels of crude oil reserves alone, followed by New Mexico which added 1.0 billion barrels of reserves. The EIA also reported yet another weekly inventory build with production at record highs – 3.6 million barrels, the 10th in a row – making the United States the biggest oil producer globally.

 

Yes, for a freaking 10 consecutive week, the U.S. inventory continues to build, and that is sending shivers down the traders’ spine. Saudi Arabia, of course, was the first oil producer to talk about production cuts. But Nigeria said it is not ready with another cut. Libya, on the other hand, has already asked for an exemption. Russia is taking its own sweet time making up its mind.

Goldman Sachs’ Jeffrey Currie said the cost of producing crude oil in the U.S. is about US$50 a barrel. In other words, oil producers in the country are breaking even at US$50 per barrel of WTI Crude (West Texas Intermediate). However, they can’t just stop pumping even when the price touches US$50 because they have to service their debts.

 

Meanwhile, Petromatrix’s Olivier Jacob recently wrote for the Financial Times that the band was stronger than ever – at US$40 to US$70 per barrel of WTI. Essentially, this means the U.S. producers are capable of maintaining current production rates even if WTI falls to US$40. This is bad news to OPEC because not many of the cartel countries can go through US$40 a barrel.

 

The national average for a gallon of gas on Thursday came to US$2.51, and will potentially plunge into the US$2.30 in the subsequent weeks, depending on the outcome of next week’s OPEC meeting. Drivers in certain states – California, Washington, Oregon, Nevada and Alaska – however paid more than US$3.00 a gallon.

All eyes are now at the upcoming G20 summit whether Russia and Saudi Arabia can reach an agreement on a cut in production. Thereafter, Saudi needs to convince OPEC producers to make a meaningful cut. Still, as President Trump tightly squeezes Crown Prince Mohammed bin Salman’s balls over the gruesome murder of journalist Jamal Khashoggi; it won’t be a walk in the park for the kingdom.

 

Trump prefers lower crude oil prices primarily because it could help keep a lid on inflation and lessen pressure on the Federal Reserve to hike interest rates, something the U.S. president has repeatedly advocated against. Higher interest rates also make the dollar even stronger, resulting in American goods becoming very expensive.

 

But even US$1.99 a gallon isn’t the lowest gas price you can get. People in Texas are spoilt with more stations and even lower fuel prices. The cheapest gas can be found at Buc-ee’s in Denton, Texas, at US$1.64 a gallon. That’s an insane US$0.43 a litre (£0.34 a litre; RM1.80 a litre).

 

Other Articles That May Interest You …

• Trump Willing To Give Saudi Crown Prince A Free Pass On Khashoggi’s Murder – In Exchange For Rewards
• Forget OPEC – These 3 Powerful Men Will Determine & Control The World Oil Prices
• BOOM!! U.S. Now World’s Largest Oil Producer – Oil Lost 20% In A Month, Could Drop To $40 In Bear Market
• Crown Prince The Barbarian – How Did The Assassination Of Khashoggi Go Haywire
• $100 Million Bribe? Saudi Sends Money To USA On The Day Pompeo Arrived To Talk About Khashoggi
• BOOM!! – Here’s Why Oil Prices Sink To 8-Week Low, Despite Saudi Production Cut & Iran Sanctions
• Obedience!! Saudi-Led OPEC Ministers Agree To Raise Oil Production – Because Trump Orders Them To
• Arab VS Arab – The Hidden Reasons Why Saudi & Its Gang “Unfriend” Qatar
• BOOM!! – Oil At Lowest Of 2017, Get Ready For $35 – $38
• BOOM!! Gasoline At US$1.98 A Gallon Or RM1.80 A Litre Now

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November 30th, 2018 by financetwitter

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