While the gas price appears to have gone down over the past couple of weeks, experts warn Canadians not to heave a sigh of relief just yet. The looming possibility of a global recession may hurt gas prices in the coming weeks.

As of July 12th, the pump price per liter of gasoline throughout Canada has gone down by 9% from its average price in June, shaving off 19 cents per liter. Ontario, in particular, saw a much sharper decline than the rest of the country in light of a temporary cut on gas taxes that took effect last July 1st.

Substantial Decreases

While oil prices have gone down significantly since soaring to record highs in June, the way many central banks across the globe have hiked their interest rates to curb inflation has sparked fears that the world economy is slipping into a recession.

These concerns may have prompted a rush to buy crude futures contracts in Canada earlier this month. According to oil industry analyst Rory Johnston, founder of Commodity Context, there was no actual trigger behind the aforementioned sales. He opines that buyers were most likely prompted by speculation.

Johnston added that crude futures contracts held by hedge funds and similar institutions are down to their lowest since the spring of 2020 when crude oil was sold for US$20 a barrel. 

Meanwhile, the price of crude from West Texas Intermediate, the benchmark for the North American petroleum industry, went down by 7.58%, settling at US$96.20 a barrel.

Keeping an Eye on Developments

Both industry analysts and market watchers are taking a keen interest in the price of oil throughout the world. But, lower pump prices notwithstanding, many feel that this price cut is temporary and that more pressing global issues will drive fuel costs up again.

The ongoing war between Russia and Ukraine is one of the most significant factors keeping the experts vigilant. The global energy sector has been significantly affected by how the conflict has severely constrained the supply of crude oil and natural gas in Europe and throughout much of the world. 

Other factors of interest are the minimal output from the United States and production bottlenecks for several oil companies.

Experts say that while the pump price of fuel will drop to as low as $1.60 a liter, the ongoing difficulties of the international oil industry will likely drive the price up in the coming months.