Gasoline prices are finally coming down, dropping over 25 cents per gallon since the beginning of October. American refineries had been running near full capacity for months, converting crude oil into fuel at a record rate.
As a result, U.S. gasoline inventories are at a record high for this time of year, nearly 10% above the five-year average. Meanwhile, U.S. fuel demand is flat, a sign that supplies could continue to rise.
Global oil prices are falling as well, dropping over $8 per barrel during the last three weeks, driven lower by stock market turmoil and concerns that the trade wars could slow global economic activity.
These declines came despite increasing tensions with Saudi Arabia, the world’s largest oil exporter. The Middle Eastern kingdom is embroiled in controversy surrounding the disappearance of a Saudi-born journalist, Jamal Khashoggi.
The Saudi regime has been accused of murdering the dissident journalist, who had been living in the United States, and prompting calls for sanctions against Saudi Arabia in response.
Currently, President Trump is calling for a full report on the disappearance, but has also cited Saudi Arabia’s importance as a military ally and trade partner, leading many to expect that any U.S. response will be muted, with little impact on oil prices.