A number of factors will influence the price of oil over time, but the supply level and active rig count provide useful insight. Other variables come into play as well, like Middle East conflicts and the level of the U.S. Dollar. The price of West Texas Crude has increased from around $15 per barrel in April of 2020 to its current $66 per barrel. On the surface, it seems oil inventory levels are at a sufficiently high level, as the green line in the below chart indicates, that oil prices should not continue to trend higher at a pace similar to the pace over the last year. With the rig count beginning to turn higher, additional oil supply will eventually find its way onto the market; however, there is a lag in oil production growth vis-à-vis rig count growth.

The largest use of oil is in transportation, with gasoline accounting for about 45% of total U.S. petroleum consumption according to the EIA. In 2019 nearly 70% of petroleum consumption was used in transportation. With the move higher in the price of a barrel of oil, the consumer is paying more for a gallon of gasoline to fill up their automobile. At the beginning of 2020 the average price of a gallon of gasoline was under $2.00. Today, the per gallon price of gasoline has increased to $2.86. This represents roughly a 50% increase in the gasoline pump price. In spite of this increase, the price remains far below the over $4.00 price reach in the summer of 2008.

Consumers are important to economic growth, accounting for nearly 70% of the economy, and higher gas prices reduce the consumer's discretionary spending. On the positive side though, according to Tony Dwyer, Chief Market Strategist at Canaccord Genuity, energy spending by the consumer garners less of their disposable income as seen below.

Source: CNBC

Lastly, gasoline inventory remains elevated too and not unlike the crude oil inventory level noted earlier. This higher inventory will provide some headwind to higher prices.

For investors, often times the direction of the change in these oil figures can be as important as the levels. So, as economies continue to open more and pent up demand results in more activity, a spike in energy prices can still occur. For the moment though, oil inventory levels seem sufficient to provide some constraint to higher prices that would impact the consumer.