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Gasoline prices could return to the $4-a-gallon threshold as soon as May, GasBuddy has projected in an exclusive with CNN. GasBuddy expects the national average to climb from the current $3.10 a gallon to a range of $3.52 to $4.05 in May as more Americans hit the roads.
After a relentless months-long climb, U.S. national average gas prices have declined to $3.104 per gallon per AAA. Gas prices have now declined 45 cents over the past 30 days and are actually lower than where they stood 12 months ago.
There’s a key reason why gas prices could reverse course as GasBuddy has predicted: rising crude prices.
Eric Nuttall, partner and senior portfolio manager at Ninepoint Partners LP, has told the Financial Post that oil prices will return to $100 per barrel in 2023. According to the analysts, many of the headwinds that have cut short the oil price rally this year, including China’s zero-Covid policy and the coordinated SPR releases by several governments, will no longer be there in 2023. Coupled with sanctions on Russia’s oil and gas, this should elevate oil prices. He has also predicted that the energy sector will continue to outperform other market sectors due to the high demand for oil and gas stocks.
Nutall is not the only bull here.
Last week, the Bank of America predicted that Brent could quickly go past $90 per barrel on the back of a dovish pivot in the U.S. Federal Reserve and a “successful” economic reopening by China.
BofA has forecast that Brent prices--currently trading at $84.62--will average $100/bbl in 2023 thanks to Chinese oil demand recovery on a post-COVID reopening coupled with a drop in Russian supplies of about 1 million barrels per day (bpd). According to the investment bank, OPEC+ is likely to fully implement a 2 million bpd output cut in a bid to boost oil prices.
By Alex Kimani for Oilprice.com
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Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com.