Heavy selling drove oil prices sharply lower on Thursday, marking another positive development for inflation just ahead of the Thanksgiving travel rush.
US oil prices tumbled almost 6% to a low of $72.16 a barrel — the lowest level since July 7.
The selloff continues a sharp reversal from earlier this fall when oil prices threatened to hit $100 a barrel. Crude is down 23% since closing at nearly $94 a barrel in late September.
The latest plunge in oil prices could help drive gasoline prices even lower for Thanksgiving. Even before Thursday’s oil selloff, average US gasoline prices had fallen to a 10-month low of $3.34 a gallon, according to AAA.
Just over 49 million Americans are expected to hit the roads this Thanksgiving, up almost 2% from 2022, according to AAA.
Analysts blamed the oil market selling on growing concerns about oversupply and weakening demand, including in China.
US crude stockpiles jumped by 3.6 million barrels last week, according to federal data released Wednesday. That far surpassed what analysts had been anticipating.
The oil market is now in what’s known as contango, meaning prices are higher for the future than they are now. And that phenomenon is “sending a super bearish signal to the market,” said Robert Yawger, vice president of energy futures at Mizuho Securities.
Yawger noted that refineries are also processing less oil, suggesting there is low demand.
At the same time, the Israel-Hamas war has not caused the regional supply disruptions that many feared at the onset.
“We haven’t seen risk materialize from the Middle East,” said Patrick De Haan, head of petroleum analysis at GasBuddy.