What's going on?

The oil price is on a tear higher! And that�s going to start costing you money…

What does this mean?

Back in February, the oil price was just $26/barrel. It�s now north of $40 and at its highest level this year. There are a number of factors that have pushed up the price, including a meeting scheduled for this weekend between Saudi Arabia, Russia and other major oil-producing countries that could lead to a robust agreement to freeze oil production (there was actually a report on Tuesday from Interfax that a deal has already been made). If correct, it could lead to a lower supply of oil globally and, thus, an even higher oil price.

Why should I care?

For you personally: If sustained, the higher oil price will start hitting your wallet. Oil fuels not just your car, but the plane you fly on, the food truck where you get your lunch and the transportation of most of the goods that you buy: the more you must spend as a result of the higher oil price, the less is left over for you to spend on other things (like eating out in restaurants). That would likely be bad for companies that sell you �non-necessary� things (a.k.a. �consumer discretionary� stocks).

The bigger picture: A lower US dollar = a higher oil price. Remember, that oil is priced in US dollars. So as the US dollar goes down in value versus other currencies, as it has recently, that pushes up the the price of oil (in US dollar terms). That�s because non-Americans are prepared to pay more for oil (in US dollar terms) since their currency has gone up in value. Note, though, that the oil price has gone up much more than the US dollar has weakened (so oil has still become more expensive for everyone).