Crude oil prices extended their recent dive, falling over 4% on Wednesday and setting new seven-month lows. Prices have fallen over 20% from a peak last April, (down to $51.09 per barrel)
A sharp 12% drop has come in the past week following President Trump’s new tariffs.
What’s Behind the Barrel? Multiple factors are pushing prices down.
- Increased supply. The Energy Information Administration (EIA) surprised analysts by reporting that Crude Oil inventories rose by 2.4 million barrels in the last week.
- Trade war fear. The US-China trade war is causing concerns that demand for oil could drop globally, and weaker demand means lower prices.
- Recession risk. Other countries like Thailand, India, and New Zealand followed suit by lowering interest rates, increasing fear of a potential worldwide recession.
How does it affect my wallet?
While the falling prices reflect the negative sentiment in the market, cheap oil is great for the consumer.
Economy running out of gas? The bearish pressure on oil and the energy sector as a whole indicates the economy isn’t booming as strongly as it has in past years, and the dip is just one of many factors pointing to a potential market pullback.
Bargain at the pump. The national average for gas prices is down to around $2.68 a gallon, and analysts predict cheap prices could be around for a while, potentially even dipping below $2 before the year’s end iif tensions stay high.
Increased supply and economic fears have pushed oil prices down to seven-month lows, looking bad for the overall economy yet rewarding drivers at the pump.
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