Gasoline prices at the pump could be more than $ 3 per gallon by Memorial Day, following a decision by the Organization of the Petroleum Exporting Countries and their allies to maintain production through April, according to a report by GasBuddy Thursday.
The national average for regular unleaded gasoline hasn’t crossed the $ 3 threshold since October 10, 2014 – more than 2,300 days ago, the travel and navigation app GasBuddy said.
On Thursday, the group of oil producers known as OPEC + agreed to extend current production cuts until April, but allowed an exemption for Russia and Kazakhstan, which are allowed to increase production modestly due to “ seasonal consumption patterns. ” Saudi Arabia, meanwhile, also said it would voluntarily continue to cut 1 million barrels a day from its own production until the end of April.
Read: OPEC + is extending the output cuts through April, as a surprise
The news pushed oil prices up Thursday, with US crude oil price hitting its highest level since April 2019. The April West Texas crude oil contract CL.1,
CLJ21,
ended Thursday at $ 63.83 a barrel, up $ 2.55 or 4.2%.
The outcome of the OPEC meeting “lends itself to a run of the bulls in the oil markets as global demand for oil recovers amid the recovery from the COVID-19 pandemic, while OPEC, which accounts for a third of the world’s production, the recovery refuses and extreme production maintains cutbacks, ”said Patrick De Haan, head of petroleum analysis at GasBuddy, in a statement.
Extending production cuts is creating a growing imbalance between supply and demand and putting more pressure on oil prices to rise if global demand continues to recover, he said. “A continued recovery seems likely, led by US drivers filling their tanks at the fastest rate since the start of the pandemic.”
De Haan predicts that the national average gasoline price now has a 70% chance of reaching $ 3 per gallon, “mainly because of OPEC’s opposition to increasing oil production.”
The GasBuddy report pointed out that the oil producers group’s decision comes at a time when Americans are increasing their hunger for fuels, with data from Pay with GasBuddy, a gasoline-saving program, showing that gasoline demand last week was the highest in nearly a year. year reached. , up 15% from the previous week and “now just a few digits” away from pre-pandemic gasoline demand.
The average price per gallon for regular lead-free was $ 2,744 on Thursday afternoon, with a price increase of more than 33 cents a gallon from a year ago, GasBuddy said.