Gasoline prices at the pump could go from $ 3 a gallon to Memorial Day, following a decision by the Organization of Petroleum Exporting Countries and its allies to keep production restrictions in place until April, according to a report by GasBuddy On thursday.
The national average for regular unleaded gasoline has not exceeded the $ 3 limit since October 10, 2014 – more than 2,300 days ago, said the GasBuddy travel and navigation app.
On Thursday, the group of oil producers, known as OPEC +, agreed to extend the current production cuts until April, although it did allow an exemption for Russia and Kazakhstan, which will be allowed to modestly increase production due to “seasonal consumption patterns”. Saudi Arabia, meanwhile, said it will also continue to voluntarily cut 1 million barrels a day of its own production until the end of April.
Reading: OPEC + extends production cut until April, in a surprise move
The news caused oil prices to rise on Thursday, with U.S. benchmark oil prices reaching the highest level since April 2019.
CLJ21,
ended Thursday at $ 63.83 a barrel, up $ 2.55, or 4.2%.
The outcome of the OPEC meeting “contributes to a bull run in the oil markets, as global oil demand recovers amid the recovery from the COVID-19 pandemic, while OPEC, which controls a third of global production , refuses recovery and maintains extreme production cuts, ”said Patrick De Haan, head of oil analysis at GasBuddy, in a statement.
“The extent of production cuts maintains a growing imbalance between demand and supply and puts more pressure on rising oil prices if global demand continues to recover, he said. “A continued 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 US $ 3 per gallon, “mainly due to OPEC’s opposition to increasing oil production”.
The GasBuddy report pointed out that the oil-producing group’s decision comes at a time when Americans are increasing their appetite for fuels, with data from “Pay with GasBuddy”, a gasoline-saving program, showing that demand for gasoline in the last week reached the highest in almost a year, an increase of 15% over the previous week and “now only one digit” of the demand for gasoline before the pandemic.
The average price per gallon of the regular unleaded product was $ 2,744 on Thursday afternoon, with prices above 33 cents per gallon over the previous year, according to GasBuddy.