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As Harvey and Irma fallout dwindles, so do gas prices.

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(FinancialPress) — Central Florida‘s seasonal gas price drop took longer than usual this year, mostly due to the fallout of Hurricanes Harvey and Irma.

Metro Orlando has seen gas prices drop $0.10 over the past week, reaching an average of $2.43 per gallon of regular unleaded, as per a report by AAA‘s Daily Fuel Gauge released Wednesday.

However, the bottom price that some stations from that area have defined is of $2.31 per gallon, signaling that the trend could reach even lower.

October usually sees gas prices drop after summer driving season winds down, and refineries start moving off of more eco-friendly summer fuel blends. But as Hurricane Harvey caused some Gulf Coast refineries to close down around the end of August, and Hurricane Irma generated supply issues for gas by mid-September, the drop took longer than normal.

Metro Orlando stations‘ prices peaked at $2.71 from September 7 to 16. The last time that prices were that high was in December 2014. During that year, they reached a top price of $3.71.

The norm for prices under normal circumstances would be for them to be lower, as oil is currently trading at $50 a barrel on the New York Mercantile Exchange.

“Gas prices remain inflated by about 20 to 30 cents and should decline another 5-10 cents this week… The state average is falling by about a cent a day, as retail prices continue to recover from the effects of Hurricanes Irma and Harvey.”

-Mark Jenkins, AAA spokesman

As reported by Bloomberg, the Saudis plan to continue with the output cuts – even increasing them to record amounts in the upcoming weeks.

“If you are going to cut to your customers in November, it’s probably a clear sign that you expect these production cuts are going to continue,”

-Phil Flynn, Price Futures Group

Ruben is a South American writer who focuses on the state of the cryptocurrency, cannabis and tech industries worldwide.

Energy

Oil prices up on expectations of production cut extension

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(FinancialPress) — A major meeting set for the upcoming week has oil on the rise, as traders look towards it to cement an extension on production cuts – even when gains were capped by rising U.S. output.

Brent crude was up $0.47, reaching $62.69 a barrel by 09:32 GMT. U.S. light crude oil rose $0.32, up to $56.74.

Brent moved within range, with analysts expecting it to move between the $61 and $63 price gap. This happens as the market looks forward to what comes of the OPEC (Organization of the Petroleum Exporting Countries) meeting set for November 30th.

The Organization, allied with other non-members that have Russia at the helm, has managed to orchestrate an effort to end globe-wide oversupply with output restrictions – hoping that this will help prices get off of their current slump. Next week‘s meeting is expected to erase the March 2018 expiry date and thus extend the agreement.

Ole Hansen, Saxo Bank senior manager, stated on the topic: “There’s a general belief that anything but an extension could have a significant negative impact … So the market is just waiting for confirmation that OPEC wants to move on with the extension.“

The fact that storage levels remain consistently high even in light of the recent measures feeds expectations of the OPEC and its allies extending the cuts. However, some believe not all participants will be willing to continue to restrict their production.

Even so, that‘s not the biggest headache OPEC is experiencing – it‘s actually the rise of U.S. drilling that‘s being led by shale oil producers.

But the biggest headache for OPEC has been a rise in U.S. drilling, led by shale oil producers.

Westwood Global Energy Group, which specializes in energy consultancy, noted that the rising rig count is an inaccurate measure of how quickly U.S. output would climb – as producers become even more productive per well. Rig count has risen from 316 rigs in mid-2016 to 738 last week.

“Westwood Global Energy forecasts an 18 percent increase in active rigs in 2018, but more rapid demand growth in certain service areas as operators focus on efficiency and delivering more for less,” the consultancy said.

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Oil manages to stabilize after prior day‘s slump

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(FinancialPress) — Crude oil is beginning to slide after reaching 2-year highs through the first days of November. It experienced a slump in Wednesday‘s session, on the heels of a surprise jump in U.S. supplies. On Thursday, however, prices experienced little change
January Brent crude went down by 13 cents (0.2%) to $61.74 a barrel. December West Texas Intermediate crude, which originally experienced a minor gain, ultimately had 6 cents shaved off of its price (0.1%), to reach $55.27. In the prior session, WTI dropped a heavier 37 cents (0.7%), reaching a price of $55.33 – its lowest close since early November.
U.S. domestic crude supplies rose by 1.9 million barrels by the end of the week of Nov. 10th, as informed by the country‘s Energy Information Administration. This prove the prediction by S&P Global Platts analysts wrong – as it forecasted a drop of 1 million barrels in supply. The American Petroleum Institute (API) reported a 6.5 million barrel a week rise on late Tuesday.
Gasoline stockpile also rose to the tune of 900,000 for the week. Meanwhile, according to the EIA, distillate stockpiles, fell 800,000 barrels. The survey forecast by S&P Global Platts indicates dips in distillates stockpiles of 2 million barrels, and 1 million barrels for gasoline.
Tama Varga, a PVM analyst, said that the recent oil slump is being seen by some traders as “as a healthy and inevitable correction triggered by bulls taking profit,” on a Thursday note. He added that while sentiment looks bearish at the moment, they may believe that the positive trend for crude “should resume shortly“.
Up to the date, WTI has risen 3% overall – propelled by a rally begun in June. Crude hit a two-year high in its benchmark in early November, and recently began pulling back.

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Venezuela can no loger pay its debts; oil could be seized

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(FinancialPress) — Venezuelan President Nicolás Maduro finally admitted, during a Thursday televised speech, that his government can no longer keep up with the payments of its piling debt. Venezuela is now officially working towards restructuring its debt payments, as is PDVSA – the state-run oil company.

Considering that the country has only $10 billion left in the bank, the $1.1 billion payment made by the oil company on Thursday is very substantial to the country‘s reserves. Maduro said in the speech that “After this payment, starting today, I decree a refinancing and a restructuring of the external debt.“

A deep humanitarian crisis is already whipping the embattled South American nation, as people experience deep shortages of food and medical supplies. Basic items are becoming less and less attainable for the population, as prices skyrocket and wages fail to rise at  a rate that would paliate the inflation. The bolivar – Venezuela‘s currency – is now worth less than a tenth of a U.S. penny.
Should Maduro‘s government fail in its attempt to restructure debt owned by bondholders — a very real possibility, as often it means that they‘d agree to be paid less money —, the country will enter into default.
A potential default could trigger a series of very unfortunate events. Those same bondholders could choose to seize Venezuelan oil as collateral.
Seeing that oil is the only significant external revenue source the government has, this would cut the financial means it has to acquire medical supplies and food. While the country has vast farmlands, it was mismanaged by their office which forces the country to import almost the totality of its food products.
Even if it were a viable course of action, debt restructuring is a long and excruciating process. Venezuela‘s neighboring country Argentina battled in international courts for 15 years to get resolution over its unpaid debts.

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