The price of oil kept going up sharply on Wednesday, adding to the pressure of already high gasoline prices that are already hurting many households and businesses in the U.S..
The cost of the international benchmark, Brent, has risen to almost one percent to $88.27 a barrel, the largest price since 2014. West Texas Intermediate crude, which is the cost of domestically produced oil, has risen 1.44 percent to 86.66 a barrel.
The price of gasoline has risen a penny since last week, mainly because of the price of crude oil, the AAA said.
“During the past several weeks, people have noticed the cost of a barrel of oil work its way slowly from the middle $60s to the lower $80s,” the AAA spokesperson, Andrew Gross said. “And the main cause is global economic optimism, even if it is found to be true or not, that the worst part of COVID may be soon behind us.”
The market looks to be reacting to possibility’s that the omicron-variant of Covid-19 infections may ebb in the next several weeks ahead, heading to a demand for oil and a new economic growth.
It has been just almost two months since Biden announced the release of fifty million barrels of oil from the U.S. Strategic Petroleum Reserve, and that is almost eight percent of the reserve total and about two times as much as there has ever been released before. Oil cost dropped in December, even though most of the analysts have thought that this could have had more to do with the increase in the new virus illnesses than the release of the Strategic Petroleum Reserve.
Oil prices being higher have a lot to do with the higher inflation. Oil cost increasing is making consumers and investors have greater expectations of inflation, which is putting greater pressure on wages and changing investment from the production of other goods and services toward extraction and refining. And because of petroleum being a part of production in many goods, rising oil prices can put added pressure on the cost of manufactured goods.