Oil rallied strongly to push crude prices above $50 a barrel on Thursday, a level good enough to relieve pressure on producers and offer hope for the near future.
Crude prices reached $50 per barrel in trading Thursday, a number we have not seen since last October. If oil prices remain above $50, that slow down the energy-firm layoffs and defaults, even if it is not enough to spur energy companies to spend again on big projects. It is also a price low enough to boost economic growth in many countries, including the U.S..

If oil prices remain above $50 that would help to counteract some of the impact to the broader U.S. economy from energy-firm layoffs and defaults, while not being a steep enough rise to cripple the most fuel-reliant industries, such as airlines and railroads. A recovery at those levels would also still leave extra money in U.S. consumers’ budgets compared with recent years.

“Prices in the $50 to $60 range would be high enough to ease some of the pressure on producers, while still low enough to boost spending on other goods and services,” Julian Jessop, chief global economist at Capital Economics, wrote in a note Thursday, according to the Wall Street Journal.

Such a recovery could also be enough to relieve pressure on central bankers in the U.S. and around the world who have seen inflation stuck below their targets for years. “If oil prices and the dollar remain broadly stable, inflation should move up further over time to our 2% objective,” Fed governor Jerome Powell said Thursday.

By: Atmos International
Date: 11 October 2019