Lower Oil and Gasoline Prices Forecast for This Summer

Trade uncertainty and OPEC+ production increases are driving oil prices lower. American motorists may see significantly lower pump prices this summer.

An ExxonMobil gas station in Rosemead, Calif., on Sept. 23, 2024. Frederic J. Brown/AFP

Amid global economic uncertainty that has affected international energy markets, the Department of Energy predicted on April 10 that American motorists will see significantly lower pump prices heading into the summer driving season.

In its April Short-Term Energy Outlook, the U.S. Energy Information Administration (EIA) revised its crude oil and gasoline price forecasts. The agency said recent developments in international trade policy and oil production will lower global demand growth for petroleum products through 2026, resulting in lower crude prices.

On April 2, President Donald Trump signed an executive order imposing a minimum 10 percent tariff on imports from all countries, including higher tariffs on some countries.

Meanwhile, OPEC announced on April 3 that some OPEC+ members will accelerate oil production increases.

Eight member countries, including Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria, and Oman, will increase production by 411,000 barrels per day in May. OPEC+ had planned for these countries to implement an incremental production increase, raising production by 135,000 barrels per day in May, June, and July.

The eight countries will meet again on May 5 to decide on June’s output, according to OPEC’s statement.

The move is likely to push down the price of Brent crude, the premium international grade.

In March, the EIA’s Short-Term Energy Outlook forecast Brent crude prices to average $74 per barrel. It now expects prices to decline by 8.6 percent to $68 per barrel in 2025, with further decreases to $61 per barrel in 2026.

In a statement shared with The Epoch Times, Patrick De Haan, head of petroleum analysis at GasBuddy.com, said international and U.S. oil prices are plunging amid growing concerns about the global economy.

“While the national average price of gasoline saw its largest weekly gain of the year, it likely won’t last long, as oil prices have plummeted amid growing concerns about the global economy following the U.S. announcement of some of the most significant tariffs in over a century, along with OPEC+ restoring oil production faster than anticipated,” he said.

At the close of the trading session on April 10 on the New York Mercantile Exchange, the price for West Texas Intermediate (WTI), the premium U.S. crude, fell $2.11 to settle at $60.24 a barrel. In London, Brent crude prices closed at $63.41, down $2.17, or 3 percent. On Jan. 15, Brent and WTI traded at over $80 per barrel on global energy markets.

Maksim Sonin, an energy executive and fellow at Stanford University, told The Epoch Times that the volatility of WTI prices reached nearly 15 percent over the past 10 days because of  worldwide trade uncertainties.

Considering these external factors, the EIA may even need to reconsider the forecasting horizon for its regular Short-Term Energy Outlook, as rapid changes are challenging the ability to provide accurate projections, Sonin said. “Things change too fast. Stability is what markets value most,” he added.

De Haan predicted that pump prices could fall well below $3 per gallon nationally, saying motorists from coast to coast are now seeing falling pump prices as crude oil declines to its lowest level since the early days of the pandemic in 2021.

In tandem with the revised crude oil forecast, the EIA also lowered expectations for the U.S. retail price for regular-grade gasoline to average about $3.10 per gallon this summer. This would be the lowest inflation-adjusted summer average gasoline price since 2020 if the forecast holds.

Additionally, new EIA data show that gasoline demand decreased from 8.49 million barrels per day (b/d) last week to 8.42 million b/d. Total domestic gasoline supply decreased from 237.6 million barrels to 236 million barrels. Gasoline production decreased last week, averaging 8.9 million barrels per day.

In line with the EIA forecast, AAA’s weekly gasoline price report showed that national pump prices, after rising for three straight weeks, had reversed course due to declining domestic crude oil prices. On April 10, the national average to fill a tank with regular unleaded gasoline was $3.22 per gallon, up from $3.08 last month but well below year-ago pump prices at $3.61 per gallon.

The nation’s top five most expensive gasoline markets are California ($4.92), Hawaii ($4.52), Washington ($4.38), Oregon ($4.00), and Nevada ($3.97). The nation’s five least expensive gasoline markets are Mississippi ($2.73), Tennessee ($2.75), Oklahoma ($2.77), Louisiana ($2.81), and South Carolina ($2.81), AAA data shows.

According to De Haan, pump prices across the United States will continue to slide if uncertainty persists in the global economy, including international crude oil markets. “The national average could fall below $3 per gallon in the weeks ahead,” he said.

The EIA’s revised crude oil and gasoline price forecast is just ahead of the traditional start of the nation’s summer travel and vacation season, which begins during the Memorial Day weekend and lasts through the Labor Day weekend. AAA, formerly the American Automobile Association, is expected to release its annual travel forecast in the coming weeks.

Last year, AAA estimated that 43.8 million vacationers traveled 50 miles or more from home during the Memorial Day travel period. That was a 4 percent increase over the previous year and nearly matched the pre-pandemic record of 44 million Memorial Day travelers in 2005.