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The Price Of Oil In The US Has Dropped To Its Lowest Level In Almost A Year

The price of oil in the US has dropped to its lowest level in almost a year because people are worried that protests in China against Covid-19 lockdowns will lower demand. West Texas Intermediate crude oil futures, which are the US standard, fell 2.7% on Monday and are now trading close to $74 per barrel, which is a price level that hasn't been seen since December 2021.

Alexander McCaslin
Nov 29, 20221 Shares171 Views
The price of oil in the US has dropped to its lowest level in almost a yearbecause people are worried that protests in China against Covid-19 lockdowns will lower demand.
West Texas Intermediate crude oil futures, which are the US standard, fell 2.7% on Monday and are now trading close to $74 per barrel, which is a price level that hasn't been seen since December 2021. Brent crude futures, which are used as a global standard, fell 2.9% and are now trading close to $81 per barrel. It hasn't been that low since January.
Since June, global oil prices have dropped by about 35%. This is because China's strict restrictions on coronavirus have kept demand low, and some of the world's biggest economies have shown signs that they are heading toward a recession.
This has helped bring down the price of gas for drivers in the United States.
The AAA says that the average price of a gallon of gas across the country is now $3.55, which is down 0.3% from yesterday and 5.7% from last month. The Energy Information Administration says that the price of crude oil has the most effect on the price of gasoline in the US.
Thousands of people from all over China took to the streets over the weekend to protest the country's "zero-Covid" strategy.
A deadly apartment fire in the Xinjiang region was one of the things that led to the protest. Videos of the event seemed to show that lockdowns made it take longer for firefighters to get to the victims.
Even though OPEC+, a group of major oil producers, is cutting production by 2 million barrels per day starting this month, global oil prices have gone down. This is the biggest cut since the pandemic began. On Sunday, OPEC+ will get together again.
Since Russia invaded Ukraine at the end of February, millions of homes and businesses around the world have had trouble paying their rising energy bills. Falling fuel prices have helped them out.

A Price Cap In Russia Is Coming

But the markets are still nervous because the West is trying to come up with a price cap for Russian oil. Major developed economies are fighting over the level of the cap, which is meant to limit Moscow's income without seriously affecting the supply of oil around the world.
Last week, newsstories said that the price of Russian oil could be capped at between $65 and $70 per barrel, which is close to what it is worth on the market right now. Still, Russia wouldn't feel much pain at that level.
But if the Western powers decide to lower the price, it could make the global energy crisis worse, especially if Russia takes action in response. Moscow could decide to cut production by more than expected, which would raise prices and make inflation worse around the world.
Craig Erlam, a senior markets analyst at Oanda, said in a note on Monday:
It’s looking increasingly likely to be done at a level that doesn’t particularly hinder Russia’s ability to sell crude - which is contributing to the drop in oil prices - or put its buyers in an uncomfortable position.- Craig Erlam, a senior markets analyst at Oanda
The price cap is set to go into effect on December 5, the same day that the European Union puts a ban on importing crude oil from Russia by sea.
Analysts at Deutsche Bank said on Monday that they thought the EU embargo would cause a "moderate supply risk" between January and March of next year, but that the effect would likely be lessened by Russia's desire to make as much money as possible from exports.
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