Oil Costs Rise 2% Amid Concerns Over Supply as US Reserves Drop
Oil prices rose 2% on Wednesday, October 18, 2023, amid concerns over supply as US reserves dropped. The US Energy Information Administration (EIA) reported that US crude oil inventories fell by 4.9 million barrels last week, the largest decline in seven months.
The drop in US reserves comes as the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, is considering cutting production to support prices. OPEC+ has already cut production by 2 million barrels per day since the start of the year, and it is meeting on October 5 to discuss its output policy for November.
Other factors supporting oil prices include:
- The ongoing war in Ukraine, which is disrupting Russian oil exports.
- Strong demand for oil from China and other Asian countries.
- A weak US dollar, which makes oil more affordable for buyers using other currencies.
Impact on Consumers
Rising oil prices could have a number of negative impacts on consumers, including:
- Higher gasoline prices.
- Higher prices for other goods and services that are transported using oil, such as food and clothing.
- Higher inflation.
Outlook
The outlook for oil prices is uncertain. On the one hand, concerns over supply are likely to keep prices supported. On the other hand, a global economic slowdown could reduce demand for oil and weigh on prices.