Oil's tumble below $100 offers relief for drivers, threat of recession
Gasoline prices have moderated with oil prices, which fell 9 percent Tuesday in the worst trading day for crude in months. Traders are worried that a potential recession could cut demand.The average price for a gallon of regular gasoline on July 5 in Houston and the U.S.2019 - Houston: $2.42 / U.S.: $2.752016 - Houston: $2.09 / U.S.: $2.262013 - Houston: $3.30 / U.S.: $3.47On its own, the sharp decline in crude prices is likely welcome news for consumers, an energy analyst says.
“If it brings a little gas price relief along with it, I think consumers will welcome this,” said Karr Ingham, a petroleum economist with the Texas Alliance of Energy Producers, an oil and gas trade group in Wichita Falls. “But they wouldn’t welcome a recession and it’s hard to imagine another reason these prices are taking this dip today.”
Meanwhile, drillers in the U.S. are ramping up oil production to replace Russian barrels lost after Moscow’s invasion of Ukraine, raising concerns that a recession could catch traders with a glut of crude. In one outlook, Citigroup Inc. said crude could fall to $65 a barrel this year in the event of a recession.
Adding to oil market fears, Shanghai launched mass testing for COVID-19 in nine districts after detecting cases the past two days, calling into question the demand recovery in one of the world’s largest oil-consuming countries if lockdowns resume.“It’s very hard to forecast right now; there’s a lot of chaos in the market,” said Tom McNulty, managing director of Chiron Financial, a Houston-based energy investment banking firm.
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