Soaring Prices at the Petrol Pumps
The US dollar index continued rallying on Monday morning as strong inflation numbers pushed more people to worry about a recession. The numbers revealed that the country’s inflation jumped to the highest point since December 1981. This inflation trend happened as the cost of most items, including food and energy remained at elevated levels. Gasoline prices crossed the all-time high of $5 per gallon during the weekend.
One thing that unites almost every country and person on the planet is our dependence on oil. When the price of that precious black gold rises, people all over the globe start to feel the pinch. And we’ve never felt that pinch quite like we are right now. What’s going on and why? Read on to find out. After that, we’ll update you on the key fundamental events of the week. Let’s go!
Petrol prices around the world
Petrol prices in the US have jumped almost 0.30 USD since the end of February.
Source: Global Petrol Prices
In the UK, average pump prices rose by more than two pence a litre in 24 hours between Monday and Tuesday, with one supermarket hiking its prices by five pence per litre. That constituted the biggest daily jump in 17 years.
The average cost of a full tank of petrol for a typical 55-litre family car has exceeded £100 for the first time.
Source: Global Petrol Prices
But UK and US consumers should count themselves lucky in comparison to those in Hong Kong. Prices have risen by over 0.20 USD in a few short months, taking the pumps there to the highest point in the world.
Source: Global Petrol Prices
What’s going on?
A few things are causing this, let’s be honest. One of the key factors in this fuel price hike is that energy is more in demand after many companies cut ties with Russia following the invasion of Ukraine in February.
Before the invasion, Russian oil imports made up 66% of all oil imports, and replacing that quantity so fast is near impossible.
Another contributing factor is the bust and boom of lockdowns. Initially, fuel prices crashed as demand disappeared almost overnight.
Crude oil (WTI) price
Source: Investing.com
However, the price jumped when global economies began to re-open due to new (considerable) demand. Yet, the oil suppliers who’ve so far struggled to scale production back up are failing to meet that demand.
So, what’s the outlook?
Experts are hopeful that prices will start to level off, at least temporarily, following a surprise drop in wholesale prices last week, but they also believe the peak is still “some way” off. Which is worrying.
The conflict in Ukraine and any thawing of relations with Russia looks like a long-game. So the pressure is really on those producers to keep the oil flowing to meet the rising demand. Can they do it? It’s certainly going to be interesting to see.
What do you think?
Do you think prices will start to ease soon? Let us know what you think and why by tweeting us at @_contentworks.
Top fundamental events week commencing 13.06.22
We have a busy week ahead of us. Here are all the events to look out for.
Monday
● GBP — GDP 3-Month Avg (APR); GDP YoY (APR)
Tuesday
● EUR — Germany Inflation Rate YoY Final (MAY); ZEW Economic Sentiment Index (JUN)
● GBP — Employment Change (MAR); Unemployment Rate (APR)
● USD — PPI MoM (MAY)
Wednesday
● AUD — Westpac Consumer Confidence Index (JUN)
● USD — Retail Sales MoM (MAY); FOMC Economic Projections; Fed Interest Rate Decision; Fed Press Conference
Thursday
● NZD — GDP Growth Rate YoY (Q1)
● AUD — Employment Change (MAY); Unemployment Rate (MAY)
● GBP — BoE Interest Rate Decision
Friday
● JPY — BoJ Interest Rate Decision
● EUR — Core Inflation Rate YoY Final (MAY)
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Speak soon!
The Contentworks team
