Why the Economy Is Weathering Oil's Swings

A return to peak price levels would hamper U.S. GDP, but overall the economy needs less oil to be productive

Rising oil prices often fuel worries about the economy, but now lower prices are generating optimism. Since the benchmark grade of West Texas Intermediate crude oil reached a peak of $78 per barrel last summer, prices have fallen, even breaking below $50 in January before recovering to around $61 as of Feb. 23—still well below the 2006 high. Unseasonably warm weather, stronger-than-expected supply, and weaker demand are among the reasons for the decline in the past several months.

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