Oil Price Up 5.4% Compared to One Year Ago
In real dollars, the price of oil averaged $100.82 in January. This is the first time the average price of oil has been above $100 for the month since October 2013. And, this was the eighth time in nine months that real oil price was higher than it was one year ago. The annual rate of change grew at a faster rate for the fourth consecutive month. The annual rate of growth is now 4.2%, which is the fastest rate of growth since May 2012.
Real consumer spending is a good leading indicator for the real oil price. Real consumer spending has been growing at a constant rate of 2.0% since May 2013. This is below the historical average rate of growth in real consumer spending. But, the recent trend in real consumer spending does indicate a rising price of oil in the near term. This is a positive sign for oil, gas field, and mining machinery production.
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