Gasoline prices have risen 13 cents over the past week and are well above the recent low of $4.07 a gallon.
Pump prices were already high heading into 2022 as supply did not recover from Covid-19 as quickly as demand. The Russian invasion of Ukraine in late February sent them much higher as investors braced for oil supply disruptions caused by the war and embargoes on Russian energy.
The Biden administration responded by releasing a record amount of oil from US emergency oil reserves, a step that helped cool oil and gasoline prices.
Here comes gasoline at $4.50?
The recent jump in pump prices cannot be done.
Gasoline futures closed at record highs on Friday. Andy Lipow, president of Lipow Oil Associates, told CNN that he expects retail prices to rise another 18 to 20 cents over the next 10 to 14 days, hitting a new record high of $4.50 a gallon.
In another blow to the inflation outlook, diesel prices are soaring.
The national diesel average hit another record of $5.54 a gallon on Monday, up 22 cents in a week and 49 cents in a month, according to AAA. Diesel powers the trucks that haul goods across the country, and the high transportation costs are likely to be passed on, at least in part, to consumers.
Europe debates banning Russian oil
US crude fell 6.1% to $103.09 a barrel. Brent, the world benchmark, also fell about 6%.
Experts blamed a variety of factors for the steep losses, including strong selling on Wall Street, concerns about China’s Covid-19 lockdowns hurting demand, and a lack of progress in Europe’s efforts to phase out imports. of Russian oil.
“Oil prices are being dragged down by the rapid and sharp sell-off in risk assets,” said Matt Smith, principal oil analyst for the Americas at Kpler.
Robert Yawger, vice president of energy futures at Mizuho Securities, agreed that the “general flight to safety” is having an impact on the oil market.
“It’s just a general massacre in risk assets,” Yawger said, adding that energy traders see the stock market as a barometer of general market conditions.
Fears about high inflation, and the Federal Reserve’s plan to lower it again, have driven US stocks lower recently.
However, oil prices remain high and the fallout from the war in Ukraine continues to cast a shadow over the energy market.
Rystad Energy warned on Monday that a European embargo on Russian oil “will trigger a seismic shift” in energy markets and push oil prices higher in the short to medium term.