Gasoline futures tick higher on OPEC+ production cut
Add Axios as your preferred source to
see more of our stories on Google.
Gasoline futures prices have started to rise again, after the global oil cartel led by Russia and Saudi Arabia vowed to cut production.
Why it matters: If sustained, wholesale gas prices could lead to an uptick in consumer prices, reinvigorating inflation as a political issue.
Driving the news: A key U.S. wholesale futures price for a fuel known as RBOB — a kind of unfinished gas that's blended with ethanol before being sold to consumers — is up more than 13% this week, to roughly $2.70 a gallon.
- The trajectory implies consumer prices will increase in the weeks to come. The national average is just shy of $3.90 according to AAA.
Yes, but: That's still much lower than the record-high prices of more than $5 a gallon we saw over the summer.
- Still, it's unhelpful to the White House, which has pointed to the decline in consumer gasoline prices as a modest victory in recent months — and to the Federal Reserve, which continues to fight overall inflation with interest rate hikes.
The bottom line: The market reaction to the production cut news has been somewhat muted, amid growing concerns that the global engine of economic growth and oil consumption — China — is struggling mightily, weighing on demand.
- The White House's willingness to tap the Strategic Petroleum Reserve to counter price spikes also appears to have insulated the market.
