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The
monthly average U.S.-dollar price of West Texas Intermediate (WTI) crude oil hovered
near its lowest price in six years, edging down $2.75 to $47.83 per barrel in March.
The price drop coincided with a strengthening U.S. dollar, the lagged impacts
of a 268,000 barrel-per-day (BPD) decrease in the amount of oil supplied/demanded
in January (to 19.2 million BPD), and a seemingly unstoppable accumulation of
crude oil stocks (to the highest levels in about 80
years). The monthly average price spread between Brent crude (the
predominant grade used in Europe) and WTI widened by $0.64 in March, to $8.16
per barrel.
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With
futures prices in “contango” (i.e., near-term contracts are priced lower than
later-term contracts), we do not expect significant additional fallout in spot
oil prices.
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The foregoing comments represent the
general economic views and analysis of Delphi
Advisors, and are provided solely for the purpose of information, instruction
and discourse. They do not constitute a solicitation or recommendation
regarding any investment.
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