If oil prices remain high, pump prices will rise. After OPEC+ cut production unexpectedly, crude futures rose $5 per barrel.
The average price of a gallon of gasoline in the United States is currently $3.51.
Gas prices are expected to increase
“We should expect it to continue to rise over the next few months, possibly reaching $4 per gallon.” Consequently, essentially higher prices,” Matt Smith is the chief oil analyst for Kypler.
“As we all know, pump prices rise like a rocket and fall like a feather.” In essence, this will lead to an increase in gas prices,” Smith continued.
While price increases are anticipated, it is unlikely that they will approach the record $5.01 per gallon set in June of last year.
Andy Lipow of Lipow Oil Associates predicts that the price of gasoline and diesel will increase by 12 to 15 cents per gallon. “As the summer driving season approaches, I expect prices to increase to the $3.65 forecast I made on February 20,” I do not anticipate a repeat of the five-dollar-per-gallon increase last summer.”
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OPEC’s sudden production cut
The price of West Texas Intermediate (CL=F) oil hovered around $80 per barrel on Tuesday, after gaining over 6% in the previous session.
Futures on Brent (BZ=F) are trading just below $85 per barrel. OPEC’s unexpected production cut of 1.157 million barrels per day and Russia’s reduction of 500,000 bpd through the end of the year have prompted Wall Street analysts to raise their end-of-year forecast for oil.
The analysts at Goldman Sachs Commodities Research increased their forecasts for Brent by $5 to $95 per barrel for December 2023 and $100 per barrel for December 2024, up from an earlier forecast of $97.
Capital Economics analysts also increased their price target, stating, “We have revised up our Brent forecast for the end of 2023 to $90 per barrel (previously $85 per barrel)”.
However, this forecast does not rule out price declines as advanced economies enter recession in the interim.”
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