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U.S. Gasoline Pricing May Herald Oil Price Stability

Economy

U.S. Gasoline Pricing May Herald Oil Price Stability

paying at the pump for gas

Young woman uses her credit card to pay for gasoline at the pump.

There are many ways to try to determine whether or not we have reached the end of the decline of global oil crisis. We can look at crude production. We can look at oil and gas field exploration permits. We can even look at the number of oil rigs in operation, as well as other indicators. Put altogether, it looks like we will be seeing oil prices stabilize soon.

One key indicator of this is that U.S. gasoline prices are no longer falling as fast as before. The declines used to be very extreme. We are talking about several cents drop every single day. Well, that has been slowing down. Based on the pace of declining prices at the pump, there may be relief to oil traders on the global market.
Another key indicator that oil prices may be stabilizing soon is U.S. oil output. This is the wildcard that really pushes Saudi Arabia and other OPEC countries to keep oil supply constant. OPEC is trying to make it uneconomical for U.S. oil producers to grab Saudi Arabia’s global market share. Well, it appears that this strategy is paying off, because U.S. oil output has fallen to 9.186 million barrels per day – compared to 1.912 million barrels per day, as of the previous week. This January 9 figure is actually the highest level of U.S. oil production since records were kept in 1983. It appears, from the supply side, that things are stabilizing.
Unfortunately, things are not that simple and clear-cut. Prices are determined by both supply and demand. Currently, due to a softening global economy, the demand just might not be there to firm prices up.

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