Oil dip could help US consumers, some emerging markets | Economic news

By DAVID McHUGH, AP Business Writer

FRANKFURT, Germany (AP) – Holiday market buyers should benefit from greater buying power thanks to the recent drop in oil prices, even though cheaper energy could also weigh on the economy. The US economy by curbing investment in shale oil production.

While the fall in oil prices does not yet match that of 2014-2016, which stood at 26 dollars a barrel, the current decline is expected to be felt soon in the global economy.

The international benchmark crude, Brent, fell below $ 65 a barrel hit its highest level in four years early October, exceeding $ 86, and a barrel of US oil fell below the bar $ 55 a barrel.

Retailers in the United States, who are relying on heavy Christmas spending, should see momentum as lower gas prices give consumers more reserve money to spend on gifts.

The average price of a gallon of regular gasoline in the United States fell to $ 2.60 from $ 2.85 a month ago. Thus, the driver of an intermediate car or crossover saves about $ 4 while drivers of large SUVs could save between $ 7 and $ 8.

US President Donald Trump tweeted on Wednesday that the price cut was "a big tax cut for America and the world".

The president, who had criticized the OPEC above US $ 80 during the oil boom, also thanked Saudi Arabia for the recent price drop. The credit that OPEC and Saudi Arabia deserve is debatable, however. Along with the United States and Russia, the Saudis have increased their oil production in anticipation of the sharp decline in Iranian exports, due to the impending sanctions imposed by the United States. But Trump added a six-month exemption to several major Iranian oil consumers when it imposed the sanctions on Nov. 5.

Instead of skyrocketing, oil prices have fallen. Concerns about slowing global growth and weak demand also weighed on prices.

It is likely that Saudi Arabia and OPEC are taking steps to raise prices. Commerzbank analysts are waiting for OPEC and some non-OPEC countries to agree to a production cut of at least 1 million barrels a day at the next meeting. of the cartel on 6 December in Vienna.

"We consider that the oil market is in a state of exaggeration and expect at the latest a significant recovery in prices after the meeting of the OPEC," the analysts wrote.

Falling oil prices are not good news for the US economy, now that the country's oil production has more than doubled in the last decade. Lower prices could result in reduced investment in new drilling rigs in the US oil-producing states, offsetting the overall impact on economic growth.

"The drop in oil prices is now a net drag on the US economy.It is a break with the past," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

Shepherdson said the drop in oil prices would slow growth "at the margin", the slowdown in the US slowdown following the recent tax cuts.

The economic impact is also different this time for Russia, which went into recession after the last oil slump. Analysts say the country, a major producer of oil and gas, is further away from the collapse of the market because it has found a way to balance the state budget with lower oil prices. This is one of the reasons why Russia pumps high-speed oil recently.

The IEA said that a plentiful global supply of oil should be welcomed as insurance against market volatility. He says lower prices are also a big hurdle for people in developing countries who have seen fuel prices rise because of the strength of the US dollar, the currency in which oil is denominated.

The US oil contract traded at $ 55.55 a barrel trading in the United States on Wednesday, up $ 2.12, or 4%. Brent was $ 64.22 in London, an increase of $ 1.69.

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