‘We Are Likely Heading into an Oil Price War’: Crude Prices Rally After Big Supply Drop

Keep an eye out for changing prices at the pump, too.

Oil prices are up — are gas prices soon to follow? Brent crude, which influences crude oil prices worldwide, increased 4.2% to $42.36 per barrel last week — and remained as high as $41.65 as of Tuesday. West Texas Intermediate futures — an influencer of U.S crude oil prices — rose 4.9% to $40.16 a barrel last Wednesday, according the Wall Street Journal, still hovering at $39.72 nearly a week later.

Even with the recent rebound, however, prices remain way below pre-coronavirus levels. Oil extended its gains following the Energy Information Administration’s release of weekly inventory data that showed the seventh decline in U.S. crude-oil stocks over eight weeks, with inventories dropping to a five-month low.

Inventory figures released by the American Petroleum Institute last Tuesday showed U.S. crude inventories dropped by 9.5 million barrels in the week ending Sept. 11. In a research note, Helge André Martinsen, senior oil market analyst at DNB Markets, hailed the drop as a surprise according to market consensus expectations of a 1.4-million-barrel increase. “We are likely heading into an oil price war,” Martinsen stated.

In a report by USA Today, Patrick DeHaan, head of petroleum analysis at fuel-savings app GasBuddy, described major implications for consumers. “There’s so many cliches I try to avoid — unprecedented, shocking, we haven’t seen this before — but this is really a moment that will live up to the meaning of unprecedented,” DeHaan said. He added that the national average price of gas could actually drop to below $2, due to anxieties around the coronavirus alongside the dramatic movements in oil prices.

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About the Author

Cynthia Measom

Cynthia Measom is a personal finance writer and editor with over 12 years of collective experience. Her articles have been featured in MSN, Aol, Yahoo Finance, INSIDER, Houston Chronicle, The Seattle Times and The Network Journal. She attended the University of Texas at Austin and earned a Bachelor of Arts degree in English.

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