Gasoline prices, consumer spending on home remodeling and travel rise as GameStop continues its wild ride and the US moves closer to digital currency issuance.
Forecast for higher gas prices
From February to mid-March, gas prices rose in the United States 40 cents per gallon to $ 2.86. Although prices have leveled off at an average of $ 2.88 a gallon this week, analysts appear to have further price increases ahead of them.
"Falling demand while increasing supply and refinery use has contributed to a slower movement in gas price increases," said Jeanette McGee. AAA Speaker. “During the week, 32 states had gains of just 3 cents or less. This does not mean that gas prices have peaked, but it is a positive sign for consumers. "
supply and demand
The driving force behind the gas price at the pump is almost always the oil price and consumer demand.
In 2020, demand collapsed as the pandemic raged. According to data, oil production exceeded demand by 3 million barrels a day Forbes. A high supply meets a low demand and means lower prices.
All of that changed earlier this month when OPEC + announced at its March 4th meeting that the cartel was reducing oil production. In Saudi Arabia alone, a million barrels of oil (BOPD) were saved every day. One barrel is equivalent to 42 US gallons.
A storm in Texas
Before the measures taken by OPEC +, the capacity utilization of the US refinery fell to 56 percent. This was partly due to lower demand. The main cause, however, was the massive storm that hit Texas in February.
Even if the refineries recover, experts see that gas prices will increase in the short term.
"The ongoing cut in OPEC + production until April indicates that supply will remain limited in the short term, even if demand continues to rise, ”said the US Energy Information Administration (EIA). "As a result, the EIA assumes that further inventory draws to meet the rising demand for crude oil will raise crude oil prices at least until the end of April."
Higher prices in the long term
Write in OilegaDavid Messler, who has worked in oil fields on six continents, also sees a decline in oil prices.
"For gasoline, the primary fuel used in the US will gradually increase in the second half of 2021 and then fall slightly below the level of 2019 in 2022," wrote Messler. However, his long-term view is less optimistic for consumers.
"In the long term we expect an increase in the price of crude oil, since the shrinking supply does not meet the increasing demand," wrote Messler. If he's right, it means you'll pay more at the pump down the street.
All over the world, people are traveling and planning to go back to leisure. In response, hotels, airlines and cruise lines are lowering prices, expanding bookings and relaxing the cancellation policy.
The World Trade Organization, the International Air Transportation Association and the hotel research firm STR agree that 2020 was the worst year in the travel business.
However, 2021 and beyond look much better.
According to a recent report by TripadvisorDomestic travel bookings are increasing and international travel will pick up in May.
The travel platform found that around 70 percent of leisure bookings in the first week of January were for domestic travel. May to August are the most popular months. Eighty percent of Americans surveyed were planning at least one overnight leisure trip this year. Around a third said they were planning three or more domestic trips in 2021.
Vaccinations fuel optimism
The introduction of COVID-19 vaccines has been cited as the main reason people are traveling for pleasure again. Seventy-seven percent of respondents worldwide say they will travel internationally if they get the vaccine. In the US it's 80 percent.
“The consumer's appetite for travel is as great as it has been since the beginning of Pandemic and, as our data shows, many people are already actively planning their next big trip – even for trips longer than four months, "said Shibani Walia, Senior Research Analyst at Tripadvisor.
Reconstruction of the boom building
Not all companies are suffering from a pandemic. Delivery companies are thriving with FedX and UPS making higher profits. Amazon and Walmart have also increased their profits. And there is a boom in the remodeling industry.
The market for new homes has tightened during the pandemic. Many people found themselves priced. They turned to the remodeling to:
Make your houses more livable.Take up remote workInclude other family members
Harvard University's Center for Housing Studies uses its LIRA (Lending Indicator of Remodeling Activity) to track home improvement trends.
Spend this year
LIRA found that home remodeling increased in 2020 when spending on such projects reached $ 339 billion. According to LIRA, the boom is set to continue to $ 352 billion in 2021.
Read Monday's article in Saving Advice for an in-depth look at the home remodeling boom and its impact on you, your wallet, and your lifestyle.
GameStop won't stop
That was the week veteran Wall Street Value traders expected GameStop to hit the market. Instead, it received renewed assistance and saw the changing of the guard continue.
After the GameStop share fell 34 percent by the end of Wednesday, it was able to make up for its losses on Thursday. Investors bought again for around $ 125 per share. The price rose 53 percent.
GameStop closed at $ 178.84 per share on Friday, down $ 5 per share.
GameStop stock was beaten for the first three days of the week on the expectation that Wednesday's earnings report would be grim.
Analysts expects GameStop to hit $ 1.35 per share on revenue of $ 2.21 billion. Instead, it made $ 1.34 per share on sales of $ 2.12 billion.
Switch to ecommerce
One ray of hope was the company's announcement that e-commerce sales rose 175 percent in the most recent quarter. This accounted for a third of the company's sales during that period.
GameStop has shifted its focus to e-commerce in the past five months. To facilitate this fulcrum, the company recently hired Jenna Owens as its new chief operating officer. She is a former executive at Amazon and Google.
More good news came for GameStop Thursday. It was selected as a buy recommendation by a short-term equity analyst firm Zack's rank.
FedCoin is getting more attention
The Federal Reserve's interest in developing its own cryptocurrency is growing.
Lael Brainard, governor of the Federal Reserve Board, told a conference at the Stanford Graduate School of Business that the central bank is currently studying all aspects of digital currency.
The Fed isn't alone in its interest in cryptocurrencies. Most central banks around the world research or create their own digital currencies, according to a survey by the International Settlements Bank.
The Facebook threat
Enhancing the interest of the Fed and other central banks is Facebook's proposal to introduce its Libra digital scale as the new global settlement currency. The idea is to support the Libra with existing currency reserves, especially the dollar.
The idea that the scales could replace national currencies in international trade has piqued the interest of central banks. The fear is that a private company with this type of currency control could have a political impact on the nations.
There are risks
Brainard made no reference to Facebook or Libra and noted risks in private companies that were too influential.
"Some of the new players are outside the regulatory guard rails of the financial system, and their new currencies could pose challenges in areas such as illicit finance, privacy, financial stability and monetary policy transmission," Brainard said at the Stanford conference.
It's early days and still a long way to go, but an upturn in travel and home renovations are positive economic signs. High gas prices seem to be here for a while. GameStop continues its spinning and the US national cryptocurrency appears to be on its way.
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