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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This article originally appeared on GOBankingRates.com: ‘We Are Likely Heading into an Oil Price War’: Crude Prices Rally After Big Supply Drop