Consumers have seen relief at the gas pump since last summer, but the price of a gallon of gas and a barrel of oil have been steadily creeping north. Is this the top for exchange traded funds (ETFs), or will we see a repeat of last year’s market frenzy?
Since January 2009, the price of gas per gallon has gone up $1, and many consumers are timid about spending on larger purchases if the price of oil and gas are going up. However, there could be good news ahead if the analysts are right.
Ruchir Kadakia for Marketplace reports that we may have seen the peak of gas prices at the pump already.
The main reason gas prices may not climb any more is that Saudi Arabians are aware of the danger of higher oil prices and have no intention of shocking consumers with sky-high prices again. They know the consequences of prices that are too high – it could lead to a world that has weaned itself off oil. Naturally, they want consumers to remain in need of this commodity. Also, Saudi Arabia will bring an enormous new oil field online this month.
As of late, gasoline prices have soared because of rising oil costs and lower refinery production; refineries have been running at less than full capacity because of scheduled maintenance and unexpected problems.
Because of lowered demand, some experts believe that the prospects of oil climbing any higher are low. Ronald D. White for The Los Angeles Times reports that the latest increase is merely speculative and technical. Fundamentals such as supply and demand are simply not at work here.
As always, the story is in the trend lines. Will oil break above the 200-day?
- United States Oil (USO): up 13.6% year-to-date
- PowerShares DB Oil (DBO): up 32.7% year-to-date