Gasoline and crude uptrend remain despite Biden calls for OPEC to help quell inflation pressures
Inflation figures highlight importance of energy prices, but Biden’s calls for OPEC to help drive gasoline and crude prices lower look to have fallen on deaf ears.
US inflation hurts the dollar
The past 24 hours have seen a big focus on US inflation, with headline consumer price index (CPI) remaining at 5.4% while producer price index (PPI) rose to a 12-year high of 7.8%.
One of the main drivers of that rise in inflation comes from the energy prices. The PPI breakdown below highlights exactly that, with energy making up the highest driver of upside.
Similarly, the CPI provided another reminder of the role played by rising energy prices, with gasoline in particular an area of concern.
With rising energy prices comes two-fold concerns for US President Joe Biden. Higher inflation raises the risk of tighter monetary policy, with the Federal Reserve (Fed) likely to pay close attention to this raft of inflation data points.
Meanwhile, the rise in energy prices has seen a 50% rise for gasoline prices at the pump. That will undoutably drain political support for Biden and reduce economic growth capacity as elevated fuel costs reduce the spending power of the everyday consumer.
With that in mind, it should come as no surprise to see Joe Biden address rising energy prices just as Donald Trump did before him. Biden’s call for Organization of the Petroleum Exporting Countries (OPEC) to raise production in a bid to drive down prices appears to have fell on deaf ears for now. That may change down the line, yet OPEC already have plans to raise production by 400,000 barrels per day (bpd), a month.
Thus, unless Biden is willing to perform a U-turn on his bid to lessen the nations reliance on oil and gas production, there are questions over whether the price will reverse on its own.
Gasoline uptrend remains for now
Gasoline has been on a very consistent rise, with the price hitting a six-year high at the end of July. While we have seen a pullback over the course of the past fortnight, this brings us back into the 76.4% Fibonacci support level.
A break below the $2.06 support level takes us out of the uptrend, with a bullish outlook in play until that breakdown occurs.
Brent Crude outlook remains bullish despite recent volatility
Brent Crude has seen plenty of choppiness over the course of the past month, with price falling back into 76.4% Fibonacci support.
While the initial rally has faltered once again in early-August trade, we are finding support at that same Fibonacci support level this week. As such, the uptrend does still remain intact unless the price breaks below the $67.06 and $64.52 support zone.
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