SunSirs: Analysis of the Impact of Decline in International Crude Oil Futures on October 7

On October 7, international crude oil futures closed lower. The settlement price for the November contract of U.S. WTI crude oil futures was $88.28 per barrel, a decline of $1.16 or 1.3%. The settlement price for the December contract of Brent crude oil futures was $100.20 per barrel, a decline of $0.38 or 0.4%.

The slight decline in international crude oil futures on October 7—with the WTI November contract falling 1.3% and the Brent December contract falling 0.4%—exerts direct downward pressure on domestic crude oil spot prices. Additionally, the weakness in overseas markets is expected to drag down the short-term performance of domestic crude oil futures, signaling a bearish market sentiment.

As a direct downstream product of crude oil, gasoline sees its cost-side support weakened by the drop in crude oil prices; this exerts bearish pressure on gasoline spot and related futures prices, though the impact is relatively moderate.

Diesel is also a direct downstream product of crude oil; the pullback in crude oil prices lowers diesel production costs, and the resulting weakening of cost support exerts slight bearish pressure on diesel spot and futures prices.

Asphalt is a product of deep crude oil processing; the decline in crude oil prices weakens cost support for asphalt, exerting slight bearish pressure on asphalt spot and futures prices.

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