Gas prices are going rise in U.S even as demand falls: U.S. gas prices fell for 70 straight days to a national average of $3.89 a gallon, according to AAA.
However, consumers should not be lulled into thinking that this streak will last until the end of the year. And one energy trader says gas station prices are moving higher again – especially in the fall and winter months.
Rebecca Babin, senior energy trader at CIBC Private Wealth, told Yahoo Finance Live that two things will put upward pressure on gas prices: reserves and sanctions.
“Even if the demand [for gasoline] goes down, the supply will go down with it, and I don’t see a significant drop,” Babin said. “If anything, I think the national average for gasoline prices is likely to go up from there.”
First, Babin notes that the Biden administration’s release of oil reserves from the Strategic Petroleum Reserve is scheduled to end in November. Second, Europe is set to increase sanctions against Russia in December. Both could reduce oil supplies, pushing up prices and spilling over into gasoline.
All of this will coincide with the heating oil season in North America. In addition to seasonal demand for the fuel, it’s more profitable for refiners to produce than gasoline, Babin said, so they’ll be more inclined to produce crude for heating oil.
The recent drop in gasoline prices has boosted consumer confidence, although the correlation with consumer spending has been less clear. And yet retail gasoline remains 23 percent higher than this time last year.
WTI crude oil, the benchmark, rebounded from a low of around $86.50 last week after a two-month slide that coincided with a rise in share prices. The rise was further supported by comments on Tuesday from Saudi Oil Minister Prince Abdulaziz bin Salman, who indicated the oil-rich country would be willing to cut output to support prices.
Soure: Yahoo Finance
