A Broad View of Gasoline Prices in 2022
The story of gas prices 2022 has brought so far, including fluctuations in US, South America, and Europe gas. Read before oil trading with iFOREX as CFDs.
Gas Prices 2022: Fuel for Inflation?
The gas prices 2022 has brought have exacerbated inflation around the world, especially in the USA and Europe. The first week of March brought a massive 11% hike in the cost of gasoline in the US, bringing the average price in the nation to $4.009 a gallon. The only time gas prices had a worse week than this was when Hurricane Katrina struck the east coast of America in 2005. In our case, the newly instituted sanctions on Russian crude oil were a big force behind the scenes. Overall, in March, US gas prices swelled by 18.3%, pushing the Consumer Price Index – a measure of inflation – up by 1.2%. This is not a small number and actually signifies the biggest monthly jump in consumer prices in over 16 years. Inflation had been around before the Ukraine conflict, however. “If not for Putin’s imperialist ambitions, inflation would still have accelerated this month, though not nearly as much”, explained Chris Low of FHN Financial in March. In fact, government monetary stimulus packages in 2021 were a big impetus for the trend. Let’s take a closer look at gas prices in 2022, the Europe gas struggle, and where prices may head next. Read before oil trading with iFOREX as CFDs.
May and June
Even though the USA and other nations had made efforts to bring relief to gas prices by opening up their strategic reserves, costs continued to climb in May. By May 10th, the price of US crude oil was less by 20% compared with March, with China lockdowns draining on demand and adding to the effect of strategic releases, but stored gasoline was still low in supply – 3% lower than a year ago. Problems at oil refineries put a further bottleneck on supply, and demand was not showing signs of abating, bringing average prices to $4.374 a gallon when a third of the month was gone. Still, Europe gas prices made US gasoline look relatively cheap because countries like France and the UK put higher taxes on the commodity. By June 11th, American gasoline cost more than $5 per gallon, but consumers worldwide were also feeling the pinch due to ongoing issues at refineries, Russian sanctions, and persistently high demand. However, relief may be around the corner. According to Reid L’Anson of Kpler, “The $5 level is where we could see very heavy amounts of gasoline demand destruction”, which, he suggested, could bring some relief to prices. Indeed, between the middle of June and the end of July, US consumers ended up paying about 65 cents less per gallon at the pump.
July
By mid-July, high gas prices had pushed down demand enough for US gas to cost a more affordable $4.631 per gallon. In China, rumblings about possibilities of further lockdowns also put a drain on demand. Another factor pressuring demand was the strong US dollar, which makes oil (priced in dollars) more expensive to foreign currency holders. Additionally, due to the high-interest-rate environment, traders felt the economy was about to slow, causing gasoline futures to drop. State by state, gas prices fluctuated wildly. Consumers in Ohio were paying 51 cents less for gas than a month before, and in Indiana it was 52 cents. Still, the average cost in the nation was $1.485 more than a year ago. Going south to Brazil, the state-owned gas company Petrobras decided to lower prices by as much as 5% in July, with the government keeping an eye on upcoming elections in October. This came after three straight price hikes for gasoline – with one in March amounting to a considerable 20%. After the move in July, JP Morgan adjusted their prediction for inflation in the South American country down from 7.6% to 7.4%.
Looking Forward
When it comes to gas prices 2022—especially Europe gas—some analysts feel we should continue to remain wary, as the June-July drop in prices was only “A lull where low-income consumers [may] get some relief before the onset of a more severe storm down the road”, in the words of Bloomberg. Still, Europe gas supplies in June were 2.4% higher than a year before and demand continued to weaken in July. Storehouses in Rotterdam, USA, and Singapore were building up too, creating a surplus. At the same time, it was anticipated that demand on the continent would rise in the final quarter of the year because of a substitution of oil for natural gas.
What should consumers expect in the last months of the year? “I don’t see this resolving itself until 2023 at the earliest, when more refining capacity comes online in the Middle East and Asia”, says Patrick DeHaan of GasBuddy. Therefore, when it comes to CFD oil trading with iFOREX, or any petroleum-based commodity for that matter, following financial news is crucial to making more well-rounded trading decisions.
This article was previously published on UAE Moments.To see the original article, click here