Oct 7, 2022 - Economy & Business

Gasoline futures tick higher on OPEC+ production cut

Data: FactSet; Chart: Axios Visuals
Data: FactSet; Chart: Axios Visuals

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.

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.

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