Pumped gasoline prices could exceed $ 3 a gallon by Memorial Day, following a decision by the Organization of the Petroleum Exporting Countries and their allies to maintain production lines by April, according to a GasBuddy Thursday report.
The national average for regular unleaded gasoline has not exceeded the $ 3 threshold since October 10, 2014 – more than 2,300 days ago, GasBuddy’s travel and navigation app said.
On Thursday, the oil producer group, known as OPEC +, agreed to extend current production cuts until April, although it allowed an exemption for Russia and Kazakhstan, which will be allowed to modestly increase production due to “Seasonal consumption patterns”. Meanwhile, Saudi Arabia has said it will also continue to voluntarily cut 1 million barrels a day from its own production by the end of April.
Read: OPEC + extends the exit reductions until April, in a surprising move
The news brought oil prices to the rally on Thursday, with crude oil reference prices hitting their highest since April 2019. Crude oil contract for April-West Texas CL.1,
CLJ21,
ended Thursday at $ 63.83 a barrel, up $ 2.55 or 4.2%.
The outcome of the OPEC meeting “borrows a run of the bulls in the oil markets, as global oil demand falls in the midst of the recovery of the COVID-19 pandemic, while OPEC, which controls a third of global production, opposes recovery and maintains extremely reduced production”, Patrick De Haan, head of oil analysis at GasBuddy, said in a statement.
“The expansion of production cuts maintains a growing imbalance between supply and demand and puts more pressure on rising oil prices if global demand continues to recover,” he said. “Continuous recovery seems likely, led by American drivers filling their tanks at the fastest pace since the pandemic began.”
De Haan predicts that the national average price of gasoline now has a 70% chance of reaching $ 3 per gallon, “mainly due to OPEC’s opposition to increasing oil production.”
The GasBuddy report pointed out that the decision of the oil producer group comes at a time when Americans are increasing their appetite for fuel, with data from “Pay with GasBuddy”, a petrol-saving program, which shows that petrol demand has reached past the highest in almost a year, up 15% from the previous week and “now just a single figure” away from gasoline demand before the pandemic.
The average price per gallon for regular unleaded was $ 2,744 late Thursday afternoon, with prices hovering more than 33 cents a gallon from a year ago, according to GasBuddy.