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Gas Prices Will Jump Back to $4.35 Soon Due to Tight Supplies: Goldman


  • US gas prices will jump back to $4.35 a gallon and will average $4.40 in 2023, Goldman Sachs has predicted.
  • Gas prices have fallen sharply after topping $5 a gallon in June, with the average price standing at $4.059 on Monday.
  • However, Goldman said oil and gasoline prices are likely to pick up because supplies remain tight and demand is relatively strong.

Goldman Sachs has predicted the cost of US gas at the pump will jump back to around $4.35 a gallon by the end of the year, and then reach an average of $4.40 next year, as supply shortages push up prices.

Gas prices have fallen dramatically over the past month or so after topping $5 a gallon in June, as oil prices have fallen and bottlenecks at refineries have eased. The AAA said the average price was $4.059 a gallon on Monday.

But Goldman said in a note Sunday it expects oil prices to pick up from here, after sharp falls in recent weeks. That’s because supplies are still running low, while global demand has remained relatively strong. 

Goldman’s analysts, led by Damien Courvalin, said they think fuel demand from US drivers will rise after showing signs of slowing over the past month. And they said they expect more congestion at oil refineries — for example, from the coming fall maintenance season — to limit supply.

The bank now expects US gas prices to reach an average of $4.35 a gallon by the fourth quarter of 2022, a roughly 7% rise from current levels.

Prices will then pick up to an average of $4.40 for the whole of 2023, peaking at around $4.53 a gallon in the second quarter of next year, its analysts forecast.

“We forecast that US retail fuel prices will rally into year-end then decline from 2Q23 onward as refining and marketing margins start to normalize,” Courvalin and colleagues wrote.

Oil prices have fallen sharply as traders have bet on a sharp slowdown in global growth and the demand for fuel. WTI crude, the US benchmark, traded at $88.37 a barrel Monday, down around 15% in a month.

Goldman on Sunday lowered its oil price forecasts in turn, but said it still expects prices to rebound somewhat, as supply remains tight.

The bank now foresees WTI crude rising to $105 a barrel in the third quarter, down from $137 previously. But it expects prices to hit $125 in the first quarter of next year.

“Our updated fundamental forecasts point to continued disappointments in supply, with demand instead supported by the still ongoing COVID reopening and gas-to-oil substitution,” Goldman said.

“This requires demand destruction on top of the ongoing economic slowdown, requiring high retail fuel prices to end the market deficit.”

Goldman said its gasoline forecast was the first time it had predicted US retail fuel prices.

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