Gasoline prices, a source of pain last year, have fallen sharply
Because supply was stronger and demand weaker than many traders and analysts had expected, the benchmark US oil price gradually fell from around $120 a barrel last summer to around $73. per barrel on Friday.
Prices briefly spiked last month after Saudi Arabia, Russia and other major oil producers announced they would cut production by 1.1 million barrels a day, just over 1% global supplies.
But that rally has run out of steam and oil prices have fallen in recent weeks. Many traders are increasingly concerned that the Federal Reserve’s interest rate hikes, designed to lower inflation, could slow the economy and trigger a recession. Central banks in Europe are also pursuing similar policies.
Fears of a recession have also increased in recent weeks due to the stalling of debt ceiling negotiations between President Biden and House Republicans. Elsewhere, signs that China and India, the world’s most populous countries, are not buying as much fuel as expected have also dampened oil prices, according to a report by research firm Eurasia Group. and advice.
“Last year you had higher demand growth and lower supply growth,” said Linda Giesecke, demand analysis manager at ESAI Energy, a consultancy. “This year, demand and supply are relatively balanced.”
After nearly two years of battling high inflation, many Americans appear to have changed how and where they buy gasoline and diesel, said Tom Kloza, global head of energy analysis at the Oil Price Information Service. Many people have started buying fuel from big-box retailers, which often offer lower prices than independent gas stations.
“Costcos, BJs, Sam’s Clubs, Buc-ees, supermarkets, all took market share from 2020 to 2022, and they’re not giving it up,” Kloza said. “It’s harder for the little guy over there,” he added, referring to gas stations that use the brands of big oil companies like Exxon and Chevron, but are usually owned by families or small businesses.