Gasoline drops by the end of the year?

Gasoline drops by the end of the year?

Photo: Marcello Casal Jr./Agência Brasil

Whenever a commodity goes up nonstop, the impression is that the rise will continue forever.

Let’s look at oil, which is what matters for this article.

When, in January 2020, the first news emerged that a highly lethal coronavirus, given the name Covid-19, had started to spread in the Chinese city of Wuhan, Hubei province, the world hydrocarbon market experienced a panic selling.

The price of a barrel of WTI (Western Texas Intermediate) type oil traded on Nymex in New York took a tumble, falling from $52.00 (January 2020) to $18.84 in just three months.

However, due to a series of port closures throughout the world, with the consequent interruption of supply, the market squeeze. And the bear became a bull. Then came a bull market which raised the price to US$ 114.67 last month, strongly boosted by the invasion of Ukraine by Russia, which is the third largest producer in the world.

Here in Brazil, Scared and afraid of losing the elections to Lula, maybe even in the first round, President Jair Bolsonaro and his parliamentary base (Centrão) are trying to lower the price of derivatives, even if it’s kind of by force.

One of the measures under study is to amend the State-owned (enacted in the Michel Temer government) to allow the Planalto to have more power over them. If that happens, a scenario closer to the one drawn in “On the edge of sustainable populism” is more likely to materialize.

Another hypothesis is to create a subsidy for diesel, in addition to the ICMS reduction already approved in the Senate, which would be outside the spending ceiling. For this, it would be necessary to decree a new state of emergency, which can be through a provisional measure.

Finishing: the federal government will do everything possible and impossible to make gasoline, diesel and cooking gas cheaper. All these measures mentionedtogether with the recent drop in oil in the international market, from US$ 125 to US$ 105, they can, indeed, cause the price of gasoline to change its course from high to low. But for it to stay that way, we need geopolitics not to surprise us again..

Ivan Sant’Annatrader and writer, and Nicolas MerolaCNPI analyst.

Note: after the best sellers “The Night Merchants”, “1929: New York Stock Exchange Crash” and “Prey”, Ivan Sant’Anna presents his new book, HEART OF TRADER, with valuable teachings about investments for you to apply in real life. Click here to secure your copy.

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About Yadunandan Singh

Born in 1992, Yadunandan approaches the world of video games thanks to two sacred monsters like Diablo and above all Sonic, strictly in the Sega Saturn version. Ranging between consoles and PCs, he is particularly fond of platform titles and RPGs, not disdaining all other genres and moving in the constant search for the perfect balance between narration and interactivity.

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