Consumers have been feeling pain at the pump, but falling oil prices could be alleviating that in the interim. In the meantime, this is helping to prop up the Direxion Daily S&P Oil & Gas Exploration & Production Br 2X ETF (DRIP).
Inflation fears and rising oil and gas prices plagued investors and consumers for much of the first half of 2022. Now, they’re getting a reprieve as prices are slowly falling as recession fears start to percolate in the economic backdrop.
Recession fears could tamp down demand for oil, thus causing prices to fall further. As such, OPEC is responding with a cut in supply to help keep prices afloat.
“OPEC and allied oil-producing countries, including Russia, made a small trim in their supplies to the global economy Monday, underlining their unhappiness as recession fears help drive down crude prices — along with the cost of gasoline, to drivers’ delight,” an AP News report noted.
DRIP seeks daily investment results that equal 200% of the inverse of the daily performance of the S&P Oil & Gas Exploration & Production Select Industry Index. Bearish traders can use DRIP as a tactical tool to play rising falling oil prices, which is a plus to drivers around the world.
“Those falling oil prices have been a boon to U.S. drivers, sending gasoline prices down to $3.82 per gallon from record highs of over $5 in June and offering a potential boost to Biden as his Democratic Party heads into midterm elections,” the AP News report noted.
Recession Fears Could Keep Pushing Oil Down
Heading towards the end of 2022, recession fears could keep pushing the price of oil down.
“Recently, recession fears have taken the upper hand,” the AP News report added, as the U.S. Federal Reserve continues to hike rates in response to inflation, which is causing fears that additional tightening could stifle economic growth.
All around the world, countries are keeping a watchful eye on whether a recession is forthcoming.
“Economists in Europe are penciling in a recession at the end of this year due to skyrocketing inflation fed by energy costs, while China’s severe restrictions aimed at halting the spread of the coronavirus have sapped growth in that major world economy,” the report added.
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