News From China Pushes Oil Prices Higher
Oil prices have inched a little higher in the past week, rebounding from the lowest prices we’ve seen in roughly a year. A barrel of West Texas was up roughly $2 in Monday’s trade, hovering around $75. And while that is higher week-over-week, Patrick DeHaan with GasBuddy noted that’s still one of the lowest prices we’ve seen in 2022. DeHaan noted the recent swing higher in oil prices is thanks to encouraging signs out of China. He pointed out the world’s 2nd largest economy has relaxed some of their COVID restrictions.
“Until there is some sort of resolute future for China, oil prices have remained under pressure, and likely will for the next few weeks, until there's more clarity on what China is going to be doing in terms of reopening after COVID. Not only that but there is a distinct possibility that even reopening China's economy is going to lead to a jump in COVID cases.”
Some have wondered with oil prices dropping into a range more typical from a couple of years ago, why are fuel prices still so high for many of us. DeHaan noted there is not always a consistent ratio between the price of oil and the price at your local station.
“The relationship between the price of oil and gasoline is not absolute. It can fluctuate, and it has fluctuated this year because the problem hasn’t been the price of oil so much, as it has been refining, which is in the middle of that equation. You can't talk about a relationship between oil and gasoline without talking about the refinery which is tasked with turning that oil into gasoline. You could have oil prices be a dollar a barrel but you could conceivably have gasoline be $10 a gallon if there's nobody able to refine it. And that has been the problem globally this year.”
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