When Russia's Vladimir Putin offered a solution Monday to the Syria crisis, suggesting that Bashar Assad's chemical weapons arsenal could be turned over to international control, Iran and China, Great Britain and France immediately backed the 11th hour deal and President Obama's speechwriters undoubtedly scrambled to rework the speech he scheduled for Tuesday night.
It was that quick. An imminent U.S. missile assault on Syria – with or without Congressional approval – was averted. And just as quickly, the Dow Jones gained 100 points and Brent and WTI crude prices dropped shortly after commodities trading opened Tuesday morning.
At the same time, an update from OPEC brought additional good news. OPEC confirmed that the global market is well-supplied with oil. Bloomberg reported that OPEC will need to provide an average of 29.6 million barrels a day next year, reducing its estimate "slightly" from last month, according to its market report.
OPEC's 12 members pumped about 600,000 barrels a day more than this level in August. OPEC boosted forecasts for output from other producers amid supply growth in the U.S., Mexico and Norway, acknowledging that its own influence in North America may be waning.
Of course, it's these fundamentals that may help Americans temporarily forget about gas prices as we head into the fourth quarter and prices at the pump should slip consistently lower. That's because U.S. fuel production has increased by about 2 million barrels per day since 2011, and that's expected to grow to 2.5 million or higher over the next six months.
As calm falls over Syria and hurricane season ebbs, it will be intriguing to see how much fear has melted away from crude prices through the year's end. $10 per barrel? $20 per barrel?
OPEC is next scheduled to review production targets on Dec. 4 in Vienna Last year on that date, the U.S. average price at the pump was $3.38 per gallon and WTI closed at $88.70 per barrel. This year we might see retail gasoline in that first week of December perhaps fall within the $3.10 to $3.20 range ... and in some places, maybe under $3. Wouldn't that be encouraging?
Gregg Laskoski is a senior petroleum analyst with GasBuddy.com.