The one constant with oil prices is volatility. In just the past year U.S. crude has fluctuated between $67 and $94 a barrel.
In 2024 the price has climbed 10% to $79 a barrel amid production cuts from OPEC-plus (including Russia) and stronger-than-expected global economic growth.
Oil prices often show sharp volatility.
Shutterstock-Maksim Safaniuk
Crude-oil prices are important for average consumers because they determine the prices of gasoline and other fuels. The average national price for regular gasoline on Wednesday, May 29, was $3.59 a gallon, about flat with $3.58 a year earlier, according to AAA.
The U.S. Energy Information Administration forecast gas prices would average about $3.70 a gallon from April through September, similar to the year-earlier period.
“Refinery operations are a source of uncertainty for gasoline markets this summer,” the agency said.
Oil-price forecasts
Many experts expect oil prices to maintain their recent levels through year-end. An April survey of 43 economists and analysts by Reuters produced a forecast for U.S. crude oil to average $80.46 this year, up from a forecast of $78.09 in March. U.S. crude traded at $79 on Wednesday.
“Oil-market fundamentals remain tighter than expected so far” this year, Suvro Sarkar, energy-sector team leader at DBS Bank, told Reuters.
“Demand trends have been more positive than expected. And they should continue to support oil prices through inventory drawdowns, given the extended OPEC+ supply cuts.”
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The OPEC production reduction may continue. In a Bloomberg survey of traders and analysts, 90% predicted OPEC will sustain the decrease when it meets June 1.
But supply could increase elsewhere, experts say. “The recent rise in the price of crude should incentivize non-OPEC+ producers to increase output,” credit-rating agency Morningstar DBRS said in a report, as quoted by The Wall Street Journal.
The agency sees crude supplies slowly rising for the rest of the year, with U.S. crude prices averaging $75 a barrel in 2024.
Goldman Sachs’s take on the oil market
On the demand side, Goldman Sachs analysts see strength. They project oil demand will grow until 2034 in a report cited by Dow Jones.
The analysts boosted their outlook for 2030 demand by 2.5 million barrels per day to 108.5 million barrels per day and then to 110 million by 2034.
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But slower-than-expected conversions to electric vehicles could extend that peak until 2040, they said. Gasoline demand could peak by 2028, the analysts said, but slow EV conversions could extend that date, too.
If forecasts of rising demand turn out to be true, that could mean higher gas prices for you.
Also, Goldman Sachs analysts expect jet-fuel demand to increase until 2040, buoyed by rising income growth for global consumers. That could mean higher flight prices for consumers.
Airfare prices climbed 4.1% in April from March but were down 5.8% from a year earlier, according to NerdWallet.
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Goldman is enthusiastic about the refinery sector, which converts crude oil to products such as gasoline and jet fuel. Global refining utilization should exceed historical averages in 2024-2027, the analysts said.
Refinery shutdowns and possible new capacity delays should buoy refiners’ profit margins, they said. The analysts recommend refiner stocks HF Sinclair (DINO) , Marathon Petroleum (MPC) and Phillips 66 (PSX) .
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