U.S. Outlook: What’s behind the oil price plunge?

Posted By Scott Anderson In Economic Outlook | No Comments

Crude oil prices had been generally rising in 2018 before peaking at $76.24 on October 3.

Large, very clean refinery at dawn. No human activity is visible. [1]Since then, there has been a sudden shift in underlying market dynamics. What’s behind the sharp change in trend?

For more on this, see highlights of my report below, followed by a link to the full U.S. Outlook, delivered on Nov. 30.

Key observations:
  • Overall, we believe the increase in oil supply rather than a decrease in oil demand is the primary driver of lower oil prices today.
  • The sudden, sharp, and sustained decline in oil prices immediately reduced the inflation expectations of bond investors.
  • Investors are now expecting lower consumer inflation over the next five years compared to early October, largely as a result of the dramatic plunge in oil and other commodities prices.
  • Bank of the West Economics expects West Texas Intermediate Crude to average $62.50 per barrel in the fourth quarter, and average just $51.50 per barrel in 2019.

Read my full report. [2]

Article printed from Bank of the West: https://changematters.bankofthewest.com

URL to article: https://changematters.bankofthewest.com/2018/11/30/u-s-outlook-whats-behind-the-oil-price-plunge/

URLs in this post:

[1] Image: http://blog.bankofthewest.com/wp-content/uploads/2018/11/refinery_crop.jpg

[2] Read my full report.: http://blog.bankofthewest.com/wp-content/uploads/2018/11/BankoftheWest_USOutlook_11_30_18.pdf

Submit an Idea

[contact-form-7 id="32" title="Share An Idea"]

You are leaving the Bank of the West Change Matters site. Please be aware: The website you are about to enter is not operated by Bank of the West. Bank of the West does not endorse the content of this website and makes no warranty as to the accuracy of content or functionality of this website. The privacy and security policies of the site may differ from those practiced by Bank of the West. To proceed to this website, click OK, or hit Cancel to remain on the Bank of the West Change Matters site.