Last week, the price of West Texas Intermediate crude oil, the price benchmark for oil pumped in the U.S., fell below $90 last week for the first time since Russia invaded Ukraine in late February.
The price dropped to $88.54 on 4 August, its lowest since 2 February, and rebounded to $90.49 at 5 p.m. on 8 August.
U.S. gasoline demand has fallen through much of the summer, leaving crude oil supplies rising on world markets. (See “Gasoline Prices Fall For Seven Weeks Straight” in this issue.)
Last month, U.S. gasoline sales were lower than in any other July since 1997, excluding July 2020 when the world’s economy was shut down.
“We’ve never seen $5 a gallon before and the shock and awe hit Americans hard,” Patrick De Haan, chief petroleum analyst at GasBuddy.com. “We did see demand destruction because of the record prices.”
Last week, gas prices below $4 appeared in 20 states; a price of $2.99 was seen in a few areas, The Wall Street Journal reported. The average national U.S. price was $4.05 on 8 August.
The falling price is yet another symptom of a world economy weighed down by high prices, the WSJ noted.
TREND FORECAST: Falling oil prices will encourage OPEC members, and Saudi Arabia in particular, to cut production to keep their oil revenues steady as the global economy stagnates and then slips into Dragflation, our Top 2022 Trend that combines rising prices and declining GDP.
On the downside of oil prices is the steepening recession and reports of a new nuclear deal with Iran that will permit them to sell more oil to western nations.