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ANS in nosedive
Risk off contagion rattles crude oil, commodities, stock market
Steve Sutherlin Petroleum News
Alaska North Slope crude fell $1.30 on Sept. 4 to close at $73.85 per barrel -- its lowest price in 2024 -- after a brutal week for the oil market. West Texas Intermediate fell $1.14 to crack the $60s with a close of $69.20, and Brent slid $1.05 to close at $72.70.
A nascent rally in early morning trading was squelched when U.S. commercial crude inventories were shown to grow in American Petroleum Institute data disclosed Sept. 4. The U.S. Energy Information Administration's weekly status report was delayed until Sept. 5, due to a shortened workweek.
But it would have required quite a comeback to erase the red ink that plagued crude markets in the preceding days.
Traders returned Sept. 3 from the Labor Day weekend in a risk off fever, slashing $3.30 from the ANS price to take the Alaskan benchmark to $75.15 at the close. WTI was also slashed by $3.21 to close at $70.34, and Brent plummeted $5.05 to close at $73.75.
Risk off contagion spread over financial markets Sept. 3. U.S. equities sank after the high-flying, artificial intelligence-focused microchip maker Nvidia took a record $279 billion hit to its market cap. It was the "steepest wipeout for any stock in a single day on record," David Rosenberg of Rosenberg Research wrote in a Sept. 4 report quoted in Barron's.
Other tech stocks swooned in sympathy. The fear would spread to a wide range of stocks and into foreign markets. Copper -- a bell weather of economic vitality -- was hammered.
The moribund financial situation in China and weak U.S. economic data continued to conjure up visions of a global slowdown, which if it came would ice fuel demand, taking crude oil prices south.
Over the U.S. Labor Day weekend, China released its official purchasing managers index data for August, CNBC said in a Sept. 2 report. Its manufacturing PMI dropped to a six-month low of 49.1, a faster contraction compared to the 49.4 reading in July.
On the supply side, reports have surfaced that rival governments in Libya are near an agreement that could restore the country's million barrel per day oil output after Libya's eastern faction in Benghazi slashed production in a struggle over control of the central bank with the U.N.-backed government in Tripoli.
Sadiq al-Kabir, governor of Libya's central bank, told Bloomberg that chance for success of a deal were "strong."
Meanwhile, the Organization of the Petroleum Exporting Countries and its allied producing nations were seen to be barreling along toward a planned increase of crude output planned for October 1.
A ray of hope was cast over the situation, however, with a Sept. 4 Dow Jones newswire report that OPEC+ members are debating delaying the proposed boost of output due to weak prices, delegates said.
"Until OPEC+ clarifies its strategy, overall bearishness will persist," Rystad Energy analyst Svetlana Tretyakova said in a note, according to a Barron's article Sept. 4.
ANS plunged $1.99 Aug. 30 to close at $78.45, while WTI plunged $2.36 to close at $73.55, and Brent slid $1.14 to close at $78.80.
Prices rose Aug. 29, taking ANS up $1.37 to close at $80.44, as WTI gained $1.39 to close at $75.91, and Brent added 90 cents to close at $79.94.
From Wednesday to Wednesday, ANS dropped $5.22 from its Aug. 28 close of $79.07 to $73.85 on Sept. 4.
On Sept. 4, ANS notched a $1.15 differential over Brent, and a $4.65 differential over WTI.
Airline travel bullish U.S. Transportation Security Administration data showed that airline passenger travel remains in an upswing from pandemic lows set in 2020.
Passenger numbers on Labor Day weekend saw a year over year gain in 2024, based on head counts of passengers passing though TSA checkpoints in U.S. airports.
On the Friday before Labor Day, Aug. 30, 2024, 2,909,901 passengers passed though the checkpoints, versus 2,742,962 passengers processed on the corresponding Friday Sept. 1, 2023, for a year over year gain of 166,939.
On the corresponding Friday Sept 4, 2000, 1,011,740 passengers passed TSA stations, 1,898,161 fewer than on Aug. 30, 2024.
On Labor Day Sept. 2, 2024, 2,747,983 passengers passed through TSA checkpoints, versus 2,645,021 passengers on Labor Day Sept. 4, 2023, for a year over year gain of 102,692 passengers.
On Labor Day Sept. 7, 2020, 975,969 passengers passed TSA checkpoints, 1,772,014 fewer passengers fewer than on Labor Day in 2024.
TSA agents screened 3,013,413 flight passengers on the Sunday following July 4, 2024, setting the record for the largest number of passengers screened on a single day by the TSA.
Overall, domestic travel over the Labor Day weekend in 2024 is up 9% compared to 2023, while the cost to travel domestically is down 2%, AAA said in a release.
According to AAA booking data, Alaska cruises are sold out for the weekend. Anchorage is the fourth most popular domestic destination on Labor Day weekend.
International travel over Labor Day weekend is down 4% compared to 2023, per AAA booking numbers.
Contributing factors include inflation, which has driven up international travel costs by 11%, and timing -- as many people had already taken international summer vacations, AAA said.
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