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Oil prices fell to fresh seven-year lows Tuesday on expectations that U.S. crude inventories rose for an 11th straight week last week, according to The Wall Street Journal (WSJ).
Oil prices have plunged in the past year as producers including the U.S. and members of the Organization of the Petroleum Exporting Countries have pumped oil at near-record highs. A stronger dollar has also weighed on oil prices this year, making the dollar-priced commodity more expensive for buyers using foreign currencies, The Wall Street Journal wrote.
The U.S. Energy Information Administration, in its monthly short-term energy outlook Tuesday, said production fell by 60,000 barrels a day in November from the prior month to 9.2 million barrels a day. In contrast, October production fell by 160,000 daily barrels from September.
Some of the biggest beneficiaries of the rout in oil prices are U.S. drivers, who have seen much of the price drop passed through to their costs at the pump. The U.S. retail gasoline price averaged $2.027 a gallon Tuesday, the lowest level since March 2009 and 64 cents below a year ago, according to AAA. Two-thirds of U.S. gas stations are selling gasoline for less than $2 a gallon, the motor club said.
Countries that rely on oil revenue are struggling, and the drop in oil prices has roiled financial markets this year. Some analysts warn that low prices today could cause a price spike in the future, as companies have cut billions of dollars in investment in new production and are expected to cut more spending next year.