According to the new government’s forecast, gas station prices have finally started to fall. This trend should accelerate greatly in the upcoming months.
The U.S. Energy Information Administration said on Tuesday that the average price of regular gasoline across the country in January might drop to $3.01 per gallon. Natural gas prices are much likely to average US$2.88 by 2022.
This call is based on EIA’s forecast that global oil production will grow faster than demand next year. It mainly considers the emergence of the Omicron variant. This will be a reversal of the past 18 months when the world reopened from COVID-19, and production has failed to meet the demand surge.
The EIA under the U.S. Department of Energy pointed out that the new version may weaken global energy consumption. They also don’t expect the increased supply from OPEC+, U.S. shale oil companies, and other significant producers.
The agency also pointed to the impact of US-led intervention in the energy market, highlighted by the largest oil reserve in the U.S. Strategic Petroleum Reserve history.
Brent Crude Oil Is the Primary Driver of Oil Prices
The average price should be US$70 per barrel by 2022, which was lower than US$84 in October and US$81 in November.
EIA stated that in November, the national average gasoline price was US$3.39, the highest level since September 2014. However, the agency expects the average to fall to $3.13 per gallon in December and decline next year.
Based on the new travel restrictions implemented after the emergence of Omicron, EIA lowered its oil consumption forecasts for the fourth quarter of this year and the first quarter of next year.
Oil prices plummeted after Thanksgiving, as investors worried that Omicron would undermine the booming energy demand. However, due to anecdotal evidence that Omicron’s symptoms were mild, crude oil prices rebounded.