The price of gasoline at the pump could exceed $ 3 a gallon on Memorial Day, following the decision by the Organization of the Petroleum Exporting Countries and its allies to maintain production limits until April, according to a GasBuddy Thursday report.
The national average of regular unleaded gasoline has not exceeded the $ 3 threshold since Oct. 10, 2014, more than 2,300 days ago, according to GasBuddy’s travel and navigation app.
On Thursday, the group of oil producers, known as OPEC +, agreed to extend the current production cuts until April, although it allowed an exemption for Russia and Kazakhstan, which will allow production to increase modestly in due to “seasonal consumption patterns.” Meanwhile, Saudi Arabia said it would also continue to voluntarily cut one million barrels a day of its own production by the end of April.
Read: OPEC + extends production cuts until April, by surprise
The news caused oil prices to rise on Thursday, and U.S. benchmark crude prices were set to peak since April 2019. West CL Texas ’CL.1 oil contract,
CLJ21,
ended Thursday at $ 63.83 a barrel, an increase of $ 2.55 or 4.2%.
The outcome of the OPEC meeting “lends a stream to the oil markets, as global oil demand rises amid the recovery from the COVID-19 pandemic, while OPEC, which controls a third of world production, shrinks and maintains extreme production cuts, “Patrick De Haan, head of oil analysis at GasBuddy, said in a statement.
“The extension of production cuts maintains a growing imbalance between demand and supply and puts higher pressure on oil prices if global demand continues to recover,” he said. “It seems likely a continued recovery, led by American motorists filling tanks at the fastest pace since the pandemic began.”
De Haan predicts that the national average price of gasoline is now 70% likely to reach $ 3 per gallon, “mainly due to OPEC’s opposition to increasing oil production.”
The GasBuddy report noted that the decision by the oil producer group comes at a time when Americans are increasing their appetite for fuel, with data from “Pay with GasBuddy,” a gasoline-saving program, which shows that gasoline demand last week peaked in almost a year, 15% more than the previous week and “now just one digit” of gasoline demand before the pandemic.
The average price of a gallon for regular lead stood at $ 2,744 on Thursday afternoon, with prices of more than 33 cents a gallon from a year ago, according to GasBuddy.