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Revisions to U.S. estimates for the price of crude oil and retail-level gasoline was spurred in part by a recent decision from OPEC to cut production starting in May. File Photo by Mohamed Messara/EPA-EFE
April 11 (UPI) — An OPEC-driven upward revision to the estimated full-year average for the price of Brent crude oil led the Department of Energy to raise its forecast for retail gasoline prices by nearly 2% to $3.42 per gallon.
The Energy Information Administration, the statistics office for the Energy Department, published its monthly outlook report for April. The agency revised its estimate for the price of Brent crude oil, the global benchmark, higher by 2.5% from the March report to $85 per barrel on average for 2023.
As the price of oil accounts for the bulk of what consumers see at the pump, EIA raised its forecast for the national average retail price from $3.36 per gallon in its last estimate to $3.42 per gallon.
“EIA expects U.S. gasoline prices to average around $3.50 per gallon this summer, peaking between $3.60 per gallon and $3.70 per gallon in June,” the report read.
Travel club AAA already has the national average for Tuesday at $3.61 per gallon, a 10 cent per-gallon increase from week-ago levels. Brent crude oil was trading at about $85 per barrel.
EIA attributed the revisions to a recent decision from the Organization of the Petroleum Exporting Countries to trim 1.6 million barrels per day from production come May.
“The OPEC+ production cut is certainly significant, but we expect growing global production-especially in North and South America-to offset those cuts,” said EIA Administrator Joe DeCarolis. “We expect that world oil production and demand for petroleum products will be relatively balanced this year.”
DeCarolis added that the biggest risk to its forecast is slower-than-expected growth due to an economic contraction. Kristalina Georgieva, the managing director of the International Monetary Fund, said last week that global economic growth will be weak, with only a 3% expansion expected over the next five years, the lowest forecast since 1990.
The IMF said Tuesday, meanwhile, that it expects global inflation to decline from 8.7% last year to 7% for 2023, due in part to the dwindling war premium that supported the price of crude oil and natural gas last year.
Nevertheless, EIA analysts said they expected energy prices would not be as high as last year.
“Across the oil price cases we examined, our models still showed average U.S. household gasoline expenditures remaining lower than last year,” DeCarolis said.
Brent traded as high as $129.20 per barrel and U.S. retail gasoline prices hit $5.01 last year.
