The price of oil is up. That’s a hint at what may be coming for the global economy.

Mitchell Hartman Mar 14, 2024
Heard on:
Scott Olson/Getty Images

The price of oil is up. That’s a hint at what may be coming for the global economy.

Mitchell Hartman Mar 14, 2024
Heard on:
Scott Olson/Getty Images

We keep a close eye on the price of oil because it feeds into so many products as well as transportation costs, and its movements can hint at what might be coming for the global economy. 

The price of oil — West Texas Intermediate and Brent crude — were both up Wednesday by nearly 3%. WTI continued to rally Thursday, though Brent fell back a bit. Meanwhile, global crude prices are up about 10% since bottoming out at the beginning of the year. 

You know what else is up? The price of gasoline in the U.S., which is going for an average of $3.41 a gallon, according to AAA. More if you’re on the West Coast or in a few other high-cost states like Illinois and Pennsylvania. 

Why the price rise? Well, it’s almost spring. And there’s a few other things.   

Gas is up around 15 cents a gallon since mid-February and more than 30 cents since the beginning of the year. Which I could see this morning as the attendant filled up my tank at the local 76 station.

The attendant told me my gas would be “$3.99 a gallon, but probably be going up tomorrow, maybe even today.”

To understand the rise in pump prices, Andrew Gross at AAA said we need to start with the crude oil being pumped out of the ground and put on the world market.

“They did cross the $80-a-barrel point this morning, which is a pretty good indication that you’re going to see a lot of upward pressure on pump prices here domestically.”

One thing driving up crude prices? OPEC is holding back supply.

Meanwhile, Gross said, worldwide oil demand is expected to go up this year.

“There’s a rosier global economic outlook. And if economies around the world are doing well, that means that there’ll be increased consumption of oil,” he said.

One economy that hasn’t been doing so great recently could influence the trend this year. 

“The big wild card remains China,” said Peter McNally at Third Bridge. He added that China’s demand has been “underwhelming.”

“And if China picks up and oil supply doesn’t respond, then you’re looking at higher oil prices, which will feed through to gasoline prices,” he said.

Which are likely to keep going up anyway, said AAA’s Gross, because of seasons. The days are getting longer, the weather warmer.

“We see this every year starting about now. Gasoline prices, they tend to peak in June and July,” he said.

Which we consumers tend to forget until the higher spring prices come around and annoy us, said economist Oren Klachkin at Nationwide Financial. 

“Gasoline price is one of those few things that we all look at every week or so when we go to fill up, that we are most sensitive to,” he said.

And which, he said, has kept consumer sentiment down. 

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