If you’re one of the many Americans who drive to work every day, you’ve probably noticed some extra cash in your pocket when filling up at the pump. That's because oil prices are hitting lows not seen in several years, and gas prices are following suit. NYMEX crude fell below $80 a barrel Thursday, trading as low as $79.78 for the first time since June 29, 2012. It’s now down nearly 25% from a high of $106.91 high reached in June.
“Today’s sell-off has a familiar theme, as rumors and murmurs float around that certain OPEC members have no desire to cut production at their upcoming meeting in late November,” Matt Smith, Commodity Analyst at Schneider Electric said. “WTI (West Texas Intermediate) is playing hopscotch at the $80 level.”
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The national average price of gasoline fell to $3.16 a gallon this week, according to AAA. Brent crude traded at its lowest level in four years, while WTI touched a two-year low. Both have entered a bear market over concerns that global supply is outpacing demand. Output in the U.S. is at its highest in nearly 30 years, while the biggest OPEC producers are cutting prices.
“With world growth expectations for 2015 being downgraded and equity markets entering bearish territory I do expect further weakness in crude oil,” Robert Haberkorn, a senior market strategist at RJO Futures said.
Corn was also in the red as the grain retreated from a six-week high on reports that weather conditions will aid harvesting in the coming weeks. Drier weather is expected to expedite the process in the U.S., where about 24% of the crop was harvested as of October 12, trailing the prior five-year average of 43%, according to the U.S. Department of Agriculture.
“Harvest progress is much slower than normal at this point in the season, but the forecast is for an extended dry period across much of the Corn Belt that should give the combines a chance at catching up in the coming weeks,” Alan Brugler, President of Brugler Marketing & Management, said in a research note.
The gold market, though has been a totally different story, posting its longest rally in two months as investors sought safe haven assets. The precious metal saw investor interest climb following poor economic data out of the U.S. and overseas. Steady U.S. consumer costs together with the Federal Reserve’s latest concerns over growth are leading many to believe the Fed will wait even longer to increase interest rates, which have remained near zero since the financial crisis of 2008. Gold is now trading around $1235 an ounce, pulling back slightly from Wednesday’s gains. Before its recent rebound, the metal fell below $1200 earlier this year.