Oil prices rallied a bit in Monday trading, increasing roughly 1%. Patrick DeHaan with Gas Buddy said a variety of issues pushed prices higher, including an ongoing increase in coronavirus cases across the globe, shutdowns in the Gulf Coast rejoin due to hurricane Ida, as well as China’s decision to tap into their Strategic Petroleum Reserve. DeHaan says China’s move has many investors confused.
“Especially when they said the [China] are trying to reign in high prices. Their Strategic Petroleum Reserve is very significant in terms of the amount of crude oil, it’s very similar to what we have in the U.S. with our Strategic Petroleum Reserves. So, it’s very interesting that China is doing this at this time.”
Where are fuel and oil prices headed into the future. DeHaan said the data does not show a clear path, but he noted this is typically the time of year we see oil demand drop across the U.S. and internationally.
“Americans get back to their normal work routines, schools have reopened, the summer driving season is essentially over. So, road trips are declining and that’s what usually precipitates the decline in the price for oil and gasoline going into the fall. So, it’s really unclear what China maybe doing releasing more crude oil to drive down prices more significantly at a time of year when those decreases normally happen.”
DeHaan noted that Delta-variant case numbers will continue to be top of mind for investors in the months ahead. He also noted there is the potential Tropical Storm Nicholas to create fuel production and distribution disruptions.
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