Crude Oil & Natural Gas Pricing: May’s average West Texas Intermediate (WTI) crude oil price per barrel decreased 10% month on month (m/m). The WTI is down 35% year on year (y/y), coming in at $71.58 / barrel in May 2023 vs. $109.55 / barrel in May 2022.

By comparison, Brent crude decreased 11% m/m to $75.47 / barrel in May 2023, and experienced shrinking of -33% y/y ($ 113.34 / barrel in May 2022). The WTI and Brent crude oil benchmarks are undergoing similar patterns this month. Additionally in May, the Brent-WTI spread decreased to $3.89.

In addition, we saw the Henry Hub Natural Gas spot price decrease 0.5% m/m to $2.15 / million Btu. This represents a 74% decrease y/y.

Figure 1 charts the monthly average spot prices of WTI and Brent crude oil, plus the Henry Hub natural gas spot price from 2000 to present. “The recent price declines are caused by a combination of supply and demand market factors. On the demand side, news of a decrease in China’s manufacturing Purchasing Managers’ Index, an indicator of economic conditions, added to market concerns about China’s economic growth and a possible U.S. recession. On the supply side, oil flows from Russia have remained higher than expected, increasing global oil supply, and putting downward pressure on crude oil prices.” (eia.gov).

At Gerdau, we routinely monitor the price of oil issued by the Energy Information Administration since it has a direct impact on the cost of shipping and freight. These costs, in addition to the data we follow on oil and gas rotary rig counts, have been shown to impact long product sales.