“Strong Chinese growth is the main reason behind rising oil prices the last couple of years,” Gene McGillian, a broker and oil analyst at Tradition Energy, said in the article. “As we see slower growth, the thought is that energy demand is going to take a hit.”
Additionally, household spending will take a hit as higher energy prices means higher gas prices at the pump.
“Gasoline, motor fuels, and fuel oil account for 5.5% of household spending, and rising. We think a $10 rise in crude oil prices will hike gasoline prices by about 25 cents (8%) and cut consumers’ purchasing power by about 0.4%, causing ‘staycations’ to come back with a vengeance,” the analysts said.
U.S. Gasoline Fund (NYSEArca: UGA) has gained 18.8% so far this year on the heels of rising oil prices.
U.S. Oil Fund
For more information on crude oil, visit our oil category.
Max Chen contributed to this article.