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U.S. gasoline prices were up slightly week-on-week, with analysts now warning that the OPEC+ surprise production cut could hit at inflation.
The OPEC+ plus announcement Sunday that it would cut production by 1.6 million barrels per day led to an immediate increase in gasoline futures, which will be passed on to consumers quickly, CNN notes.
Wholesale gasoline prices as reflected in the RBOB were up 3.14% at 11:55 a.m. EST on Monday.
Meanwhile, AAA showed the national average price per gallon at the pump as $3.506, up from $3.439 a week ago.
“I think OPEC is reawakening the inflation monster,” CNN cited Tom Kloza, global head of energy analysis for OPIS, which tracks gas prices for AAA, as saying. “The White House has to be shocked and major-time pissed. It certainly alters the calculus for a while.”
Kloza warns that prices at the pump could run up to $3.90 in a short time frame, though he dismissed fears that prices could spike beyond in the medium-term.
Just last week, ahead of the OPEC+ announcement, gasoline prices were starting to trend higher, with analysts blaming high demand and low supply.
For the week ending March 24, gas reserves fell to 226.7 million barrels, from 229.6 million barrels, while there was a narrow increase in demand, according to the Energy Information Administration (EIA). At the time, AAA said “we may be seeing a return to seasonal trends in demand with warmer weather and longer days, but waffling oil prices could mitigate any increase at the pump for now.”
Oil prices could continue to march higher, with the International Energy Agency warning that OPEC+ cuts could add fuel to the inflationary fires. Various analysts, in the meantime, warn that oil could even reach $100 by June, putting further pressure on consumers in the summer driving season.
"The new cuts are underpinning that the OPEC+ group is intact and that Russia is still an integral and important part of the group," SEB analyst Bjarne Schieldrop said, as reported by Reuters.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com