(ConservativeInsider.org) – When Russian President Vladimir Putin first began his invasion of Ukraine, gas prices increased as calls started for nations to boycott Russian oil. After weeks of fighting, oil prices hit a record high, forcing gas prices to rise above six dollars a gallon in some areas of the United States. However, the cost of oil took a steep drop this week, and some wonder if gas pumps will reflect that.
Oil Falls 27%
The international oil benchmark, Brent crude, hit a 14-year high on Tuesday, March 8, at $139.13 per barrel. A week later, prices were down 27% to $99.91 a barrel. This price drop was likely due to a mixture of reasons, including a decrease in oil demand from China because of more COVID-19 lockdowns and the hope that peace talks between Russia and Ukraine would bring a ceasefire in the coming days.
Similarly, the US oil benchmark, West Texas Intermediate crude, ended Tuesday, March 13, at $96.44 after hitting a market high of $130.50 the week prior. According to Jeffrey Halley, a senior market analyst at Oanda, the Federal Reserve’s recent 25 basis point rate hike could also have affected these numbers.
Additional Factors That Influence Gas Prices
While consumers will likely see a slight drop in gas prices from the decrease in oil prices, changes in demand for gas could also cause prices to fluctuate in the coming weeks. As warm weather approaches, the demand for gas may increase as people travel again, pushing prices upward. Patrick De Haan, head of petroleum analysis at GasBuddy, is optimistic the prices will continue to drop:
Oil collapsing again this morning:
WTI $94, down $8
RBOB down 22c/gal
It’s only time before we sink back under $4/gal average as long as these levels hold.
— Patrick De Haan ⛽️📊 (@GasBuddyGuy) March 15, 2022
There was some concern the bans many nations placed on Russian oil would continue to push prices higher. However, India purchased some Russian oil at a discounted price, likely mitigating any major global supply issues from arising.
Feelings Greatly Impact How People Trade Commodities
If people think a commodity like gas will be in short supply, the price will increase as people try to buy reserves. Additionally, the fear surrounding a potential world war caused the spike in oil and gas prices in recent weeks. Yet, according to Rebecca Babin, a senior energy trader at CIBC Private Wealth US, now people are trading “on hope” that Ukraine and Russia will stop fighting soon. With this, it’s vital to note gas prices are heavily influenced by how people feel about the state of the world, which seems to change almost daily.
So, while much is up in the air regarding oil prices, Americans will likely breathe a sigh of relief at this dip in gas prices. Still, nobody can know what next week will bring.
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