Publications: Notes at the Margin

WTI and Brent Driven by Dying Speculation; EV Impact on Gasoline Use in California (January 15, 2024)

 

So far, the new year has seen, among others, the following developments. Economic growth in China is slowing, limiting the rise in oil consumption. The US Securities and Exchange Commission, prodded by the courts, has approved exchange-traded funds (ETFs) for bitcoins. Investors continue to pour funds into the “Magnificent 7” tech stocks.[1] Global warming limits how many ships can pass through the Panama Canal, distorting global crude markets. The Houthis have extended the Israeli-Hamas war to the Red Sea, disrupting fifteen percent of its marine transport traffic. The production of less-desirable light sweet crudes is still increasing, with oil price stagnation as a consequence. The sparse number of speculative traders still focused on oil seem unable to provoke sustained price increases. Wars evidently no longer matter.

 

At the same time, new data suggest that electric vehicle (EV) penetration in California is cutting into gasoline sales. The impact, though, is modest, less than ten thousand barrels per day in the state.

 

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