But another, more domestically based surprise driving WTI crude higher was an unexpected and quite sharp decline in US crude oil inventories.
Source: EIA |
Some are attributing this decline in crude stocks to higher interest rates, which make storage of crude (cost of carry) more expensive. Perhaps. A better explanation however is the improved transport to the Gulf Coast refineries and a somewhat higher demand for refined products.
Source: EIA |
This is not great news for the US consumer. The higher mortgage rates and the end to the mortgage refinancing spree were to some extent offset by a bit lower gasoline prices (although prices are still up on the year).
Source: GasBuddy.com |
But given the spike in crude, that benefit of lower gas prices has ended for now. Consumers will pay more at the pump - and spend less elsewhere.
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