Crude oil prices (BZ=F, CL=F) have risen over the last week while gasoline prices (RB=F) have remained relatively stable even as the summer travel season recovers. Patrick de Haan, Head of Oil Analysis at GasBuddy, joins Market Domination to provide insight into crude oil and gas prices and Biden's potential impact on gasoline prices.
“Actual demand at gas stations is essentially under 9 million barrels per day, according to GasBuddy demand data. It's very weak compared to 2019 and 2018. Historically, it's been in the mid- to high-9 million barrels per day range. So we think demand is still weak and, as you say, I think COVID is still impacting it. We saw a lot of revenge travel in 2022. International travel wasn't really possible then. Last year gas prices came down. I think we saw some domestic revenge travel last year as well. I think we'll see some of that revenge travel this year as well,” de Haan told Yahoo Finance.
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This post was written by Nicholas Giacobino
Video Transcript
Temperatures may be rising in many parts of the country, but gas prices aren't rising, at least for now.
join.
Now, Patrick Dehon is a gas bro and head of petroleum analysis.
Patrick, it's always good to see you.
Not today, but over the past few weeks, oil prices have started to gradually rise.
How long will it take for this to be reflected in gasoline prices?
Yeah.
And I'm glad to be back with you again.
Well, you know, gas prices were stable, probably down to 10 or 15 cents or less.
But as you say, oil prices have risen again in recent weeks, to around $8 a barrel.
So instead of gas prices rising immediately, gas prices will not fall as much and will soon rise again.
I think it will probably stabilize at around 3 43 45.
Many states are still falling.
However, we expect this situation to probably end in the next few days and prices will start to stabilize.
So right now, I know it's kind of crazy to have oil prices going up.
Don't expect gas prices to rise significantly just yet.
Oil prices would need to rise a bit more before the national average would start to show a larger response.
Patrick, it's also an election year, and gas prices are a big election issue.
Any and all levers we get will likely affect gas prices, and they will likely fall.
The story continues
But, you know, sometimes stuff like this happens in election years. Maybe the S or the Strategic Petroleum Reserve will be tapped, but it's unlikely.
My understanding is that they plan to do so this year.
But overall, does Biden have any influence here?
Not much.
I don't think it will be just lip service, and the administration may use that to hint at potential oil reserves, because the sentiment of potentially providing oil reserves may be enough to keep oil prices under some pressure, in some balance.
But as you said, I don't think that's necessarily a tool that governments should utilize.
It would also set a dangerous precedent by using strategic reserves as a means to lower strategic prices instead of the Strategic Petroleum Reserve.
The good news is that S pr continues to increase.
Of course, the Department of Energy was accelerating plans to buy back oil, but those plans fell apart when oil prices rose above $80 a barrel.
But then again, the president doesn't really have that much mechanism, especially considering Mother Nature.
Parts of the Atlantic Ocean, Gulf of Mexico and Florida are starting to see some reminders that this hurricane season should be very active and could be filled with uncertainty.
Yes, absolutely, Patrick.
I'd also like to hear your opinion on the current demand.
As you know, the peak of the revenge travel phenomenon has passed, but it still feels like demand for travel is relatively strong.
What are you seeing?
What patterns do you see?
And I'm particularly interested in regional patterns.
Well, regionalization is very interesting in the West. I would say gas prices are higher in California, Oregon and Washington.
We tend to see a little bit more demand destruction there.
Well, I would certainly classify demand so far this summer as somewhat weak.
In other words, the Department of Energy's EI A is an implicit demand indicator that measures how gasoline moves toward the pump.
It doesn't measure how gasoline is delivered at the retail level.
This is where gas data comes in handy.
Well, our GasBuddy demand data shows that actual demand at gas stations is essentially below 9 million barrels.
one day.
It is very weak compared to 2019 and 2018.
Traditionally, we would see numbers in the mid to high 9 million barrels per day range.
So I think demand is still weak and, as you say, COVID-19 is still having an impact.
2022 has seen a lot of revenge trips.
Travelling abroad really wasn't possible back then.
Gasoline prices fell last year.
I think we saw some revenge tourism in the country last year as well.
I think we'll see some revenge trips this year.
But now that airfares are down compared to last year, I think a lot of that is happening in the sky rather than on the roads overseas.
Well, the essential question about OPEC+.
Yeah, I don't expect huge changes from month to month, but sometimes changes happen.
Anything that could bring about change in OPEC+.
Well, again, it's cheesy to bring that back.
As we all know, OPEC has made some salacious statements suggesting further production cuts are possible.
But I think OPEC is pretty happy that oil prices have recovered.
Currently, global oil inventories remain tight.
OPEC is likely hoping that the summer driving season will be stronger than it actually was affected, but, you know, OPEC may well refrain from commenting in order to keep oil prices within a certain range.
This is exactly the situation we find ourselves in right now.
$85, no, $75 to $85, not much of an increase.
Now, I think what was interesting about the OPEC meeting here a few weeks ago was the emphasis on when oil production will resume.
This is a very interesting development.
Well, I'll wrap it up here, but Patrick, thank you so much for stopping by.
