The U.S. is currently suffering from lackluster summer gasoline demand. With 152 million barrels less than the same period last year, it may be time for oil prices to take off. However, a drop in demand this summer is not likely to result in a dramatic price increase. In fact, the opposite may be true. The price of oil could even decline to as low as $30 a barrel by July 2022.
While it is impossible to predict when gasoline demand will hit its peak, the latest data indicate that the U.S. is not yet in a recession. The Energy Information Administration reports that summer gasoline demand is down. The decrease in demand is likely due to the fact that Americans are driving less and spending less on gas. However, the first signs of a recession are beginning to show and that is hurting oil prices.
If the OPEC+ member countries do not increase production, the market will continue to struggle to balance itself. As a result, prices could spike again. OPEC+ President Mohammed Barkind has already warned of looming price volatility and supply shortages. The situation could get worse if a hurricane hits US oil infrastructure. However, if the situation continues to worsen, it may be time to sell off the stock.
Gasoline prices have been falling since March, but it’s not yet reaching record lows. While oil prices may have fallen in the near term, they could still fall by 10 cents a gallon. Station owners pay lower wholesale costs and will be watching how much of those savings they pass on to their customers. As a result, gas prices could go up like a rocket or fall like a feather.
While prices are falling, gasoline prices continue to remain high in many states. Gas prices in California and Idaho remain at more than $5 per gallon. However, it’s important to note that oil prices are not the only thing affecting the U.S. economy. While gas prices are declining, drivers in many states remain stuck paying more than five dollars a gallon for gasoline.
Imports of distillate fuels to the East Coast are rising and a recent study shows that they are near a five-year high. Meanwhile, demand in the U.S. will likely remain low throughout the summer as refining capacity in the East Coast is limited. Further, limited refining capacity may lead to a reduction in product inventories on the East Coast.