OIL – THE LONG VIEW….
Today’s chart provides some long-term perspective on the price of a barrel of crude oil with a long-term chart of inflation-adjusted West Texas Intermediate Crude. Today’s chart illustrates that most oil price spikes coincided with Middle East crises and often preceded or coincided with a US recession.
The logic behind this is that a Middle East crisis can potentially disrupt an already tight oil supply and thereby drive crude oil prices higher. Also, rising oil / energy prices can, among other things, increase costs within the global economy’s supply / distribution chain and thereby contribute to inflation which can in turn encourage governments to halt or reduce any plans to stimulate the economy. As a result of a slowing global economy as well as increased global oil production, crude oil prices have declined over 20% since early May alone.
Notes:
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2 Comments
I think Brent would be a more useful mark here as WTI, particularly for the last few years, has had some slightly different fundamentals and is a more US-centric measure. Granted, the price change directions (if not magnitudes) are probably comparable.
So, are we going to have a bunch of people criticizing Core CPI because it overstates inflation once you strip out energy?
Still not enough to expect price cut in Indian oil market so people still have to suffer and waste whole day for getting the piece and support from the governmental.