The price of crude oil has continued to drop, with West Texas Intermediate falling below $63 per barrel on Wednesday.
The impetus behind this decline can be attributed to OPEC’s decision to increase production as it looks to address cartel members that have violated production quotas and to get ahead of increased demand next year.
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But rising shale production in the United States is playing a role as well. Despite a large reduction in the Baker-Hughes rig count in the United States, the net supply of oil coming out of the U.S. has continued to increase as producers have become more efficient.
It’s sign of the strong condition of the U.S. oil sector.
The beneficiaries of this greater supply of oil will be import-sensitive economies across the globe as well as consumers in the United States.
The U.S. average price of gasoline has already fallen to $3.14 in the middle of summer driving season and the annual late-summer peak in refinery demand for crude.
In the end, the rising production, both in the United States and among OPEC members, suggests continued downward pressure on the inflation rate at a time when expectations are for an increased cost of goods.
