It might not yet be the “snap-back” we’ve been talking about for some time — that inevitable climb back upward after a seven-month downward spiral — but the price of oil has shot up 19 percent across the last four trading sessions.
So maybe start preparing to say goodbye to those savings you’ve been pocketing at the pump every week or two.
Brent crude LCOc1, the international benchmark, rose $3.16 (about 6 percent) to $57.91, and U.S. crude CLc1, West Texas Intermediate, rose $3.48 (7 percent) to $53.05.
The four-day surge is the biggest such gain since January 2009.
As Reuters reports:
The rally began on Friday, when oil services firm Baker Hughes said the number of U.S. oil drilling rigs had its biggest weekly decline in nearly 30 years.
Of course, that could mean further job losses in the U.S. oil-production sector. Baker Hughes last month announced plans to layoff 7,000 employees, or 11 percent of its workforce, because a global oversupply of oil pushed down prices and made expensive-to-extract American oil less profitable.
Fuel Freedom has argued that American workers, as well as consumers, need cheap fuel prices for the long-term, instead of the job-killing rollercoaster of volatility that’s inherent in the oil market. The solution is to displace some of the oil we consume with cleaner-burning, cheaper fuels like ethanol and methanol.
John Hofmeister, the former president of Shell Oil and a star of the documentary PUMP, has said that the oil price plunge is an “anomaly,” and has warned of a price “snap-back” based on the reduction in U.S. drilling. Last month he told CNBC: “The more consumers enjoy the price production, the sooner we’ll be headed back to higher crude-oil prices. That’s the reality.”
As Reuters explained, oil didn’t just spike in a vacuum. Tuesday’s jump came after the dollar fell about 1 percent against other currencies, the dollar’s biggest one-day drop since October 2013. This had the effect of elevating the value of oil and other commodities.
Despite the four-day rally, some traders doubt that the selloff in oil was over, citing last week’s build in U.S. crude stockpiles as evidence. A U.S. refineries strike also stretched into its third day on Tuesday, weakening the picture for crude.
The Wall Street Journal reported that “few investors and analysts are willing to call a bottom to a downdraft that began in July, the magnitude of which caught many market experts by surprise.”