The recent sharp decline in Brent crude should have a positive knock-on effect on the US consumer. That's because it is likely to give a small boost to disposable income by bringing down retail gasoline price (gasoline and US crack spreads are tightly correlated with Brent.)
CS: - The latest declines in Brent futures should provide light relief to stretched US consumers. If sustained gasoline prices could fall to around $3.10 a gallon, 20% lower than their late March peak and a level last seen in January 2011.
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| Brent futures and retail gasoline |
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