Oil Market Movements Don't Guarantee Lower Gas Prices

When Russia invaded Ukraine last month, oil prices spiked. This week, they reversed course, cratering some 30% from their peak near $140 a barrel. Brent crude, the global benchmark, is now trading below the psychologically significant $100 mark, Allison Morrow reported for CNN Business.

Photo Insert: Hope springs eternal but a regime of low petroleum prices may just not be in the offing.

Oil traders appear to be reconsidering their initial panic over the war. Prices initially shot up in part because traders shunned Russian oil, depriving the market of an estimated 4 million barrels a day. But traders may have overreacted. The supply-demand crunch appears to be less dire than a week ago.

A COVID-19 outbreak and citywide lockdowns in China signaled there may be less demand for fuel as fewer people travel. Saudi Arabia and its OPEC partners could loosen their spigots to boost global supply as the United Arab Emirates (UAE) told Washington that it wants to increase oil production and would encourage its fellow OPEC allies to do the same.

Hope springs eternal but a regime of low petroleum prices may just not be in the offing. The steep drop in oil doesn’t mean gas will see a similarly dramatic fall. So far, it’s only helped in halting the rise of gas prices in the US.

"Gasoline prices can go up like a rocket and come down like a feather," said Tom Kloza, global head of energy analysis at the Oil Price Information Analysis. On Tuesday, the average price of a gallon of regular gas fell a whopping nine-tenths of one cent, to $4.32 a gallon.

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