March 31 (UPI) — Retail gasoline prices are on the rise as broader markets start to breathe a sigh of relief over recent concerns about the health of the global financial sector, analysts said.
Travel club AAA on Friday put the national average retail price at $3.50 for a gallon of regular unleaded, six cents per gallon higher than week-ago levels and 15 cents more than this time last month.
Tom Kloza, the head of the Oil Price Information Service, said Friday marks the first time in 122 days that the national average was this high. The first quarter average was $3.40 per gallon.
Andrew Gross, a spokesperson for AAA, said the move higher was largely a result of higher crude oil prices and increased demand.
“These two factors will cause drivers to see prices increase for now,” he said.
The price for Brent crude oil, the global benchmark, was flirting with $79 per barrel on Friday, a bounce back from levels closer to $70 that followed the collapse of Silicon Valley Bank in mid-March.
Apart from state taxes and costs of delivery, the price of crude oil accounts for the bulk of what consumers see at the pump.
Demand and confidence in general, meanwhile, remain robust despite elevated gasoline prices at the retail level. Gasoline consumption last week averaged 9.14 million barrels per day, federal data show, the highest level so far this year. The government expects that to continue at an average 9 million bpd over the next few months.
Ole Hanson, a commodities strategist for Saxo Bank in Denmark, said his team expects global demand will increase through the summer.
“With that in mind, a deeper than expected slowdown, as signaled by current U.S. rate cut expectations, may reduce the eventual growth, thereby reducing the upside for crude oil later this year,” he said.
U.S. inflation is cooling off from last year’s peaks near 9%, leaving many analysts to expect the U.S. Federal Reserve will eventually pause rate hikes that make borrowing more expensive for consumers.