Oil Prices Hit 4-Month High, Driving Gas Near $3.50: Here’s Why It Could Get Worse


Topline

The West Texas Intermediate, a national benchmark for crude oil, climbed more than 1% on Thursday to a four-month high, as uncertainty in the international energy market and low supplies in the U.S. continue to drive up the price of oil—and gasoline.

since November, while the national average price neared $3.50 per gallon.Getty Images

Key Facts

The WTI hit a four-month high of just over $80 per barrel Thursday morning, its highest point since Nov. 6, while the Brent Crude, an international benchmark, jumped nearly 1% on the day to roughly $85, another four-month high.

U.S. gas prices, meanwhile, surpassed $3.42 on average, according to data from GasBuddy, marking the highest price at the pump since early November.

Martijn Rats, an analyst with Morgan Stanley, suggested oil prices could remain high heading into the summer, speculating to CNBC’s “Squawk Box Europe” this week that the summer “could be tighter than people expect” due, in part, to OPEC+ members’ production cuts and low inventories.

U.S. gasoline stocks have been dwindling in recent weeks, dropping to 234.1 million barrels in the week ending March 8, according to the Energy Information Administration, a decline from 239.7 million barrels the week before and 247 million barrels a month ago.

Analysts have also suggested recent conflict in the Red Sea and Israel’s war with Gaza-based militant group Hamas could keep pushing oil prices up, while recent Ukrainian attacks on Russian oil refineries have also thrown a curveball into the international energy market.

What We Don’t Know

Whether the price at the pump will continue to increase as oil prices inch up. Andrew Gross, a spokesperson for AAA suggested rising gas prices can be attributed to “more expensive oil,” which is refined into gasoline, as well as rising gasoline demand, a springtime trend associated with “longer days, better weather, and more opportunities to hit the road,” Gross said. Gasoline demand shot up to just over 8.6 million barrels per day in the week ending March 8, according to EIA data, an increase from 8.5 million barrels the week before—though slightly below where demand stood at this time last year.

Tangent

As of Thursday, gas prices are most expensive in California—a typically pricy state for gas due in part to state gas taxes and transportation costs—where drivers see an average of $4.87 per gallon, according to AAA, beating out eight other states with averages above $3.50. Those include Hawaii ($4.71), Washington ($4.24), Nevada ($4.15), Oregon ($3.99), Alaska ($3.76), Illinois ($3.70), Arizona ($3.64) and Pennsylvania ($3.51). The cheapest gas can be found in Mississippi, where the average cost of a gallon costs a reasonable $2.98.

Further Reading

Oil Prices Rise Amid Violent Attacks In Red Sea: Will Gas Prices Increase As A Result? (Forbes)

Gas Prices Hit Four-Month High—Here’s Why Analysts Expect More Price Surges (Forbes)

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This article was originally published by a www.forbes.com . Read the Original article here. .