In a new report recently sent to Rigzone, Fitch Solutions Country Risk & Industry Research projected that the first month benchmark NYMEX RBOB gasoline would average $2.70 per gallon this year.
The same forecast was made in a separate Fitch Solutions report sent to Rigzone on February 16, which revealed the company’s NYMEX RBOB gasoline price forecasts through 2026.
“Above-average crack spreads will keep 2023 gasoline prices elevated but below 2022 levels,” Fitch Solutions noted in its latest report.
“Given the fundamentals, the gasoline market will remain slightly undersupplied in 2023, which will keep prices high. Relatively low gasoline inventories will put a price floor, preventing a sharp drop in prices if production or demand goes against our expectations,” the company added.
“The muted demand outlook, particularly among developed markets, will see prices retreat from last year’s levels. Gasoline prices will follow the path of oil prices, which are also expected to decline from from 2022 highs, but remain above historical levels,” the company continued.
“Overall, crude oil and fuel prices are likely to see smaller risk premia in 2023 as the broader market has already priced in the effects of Russia’s invasion of Ukraine and imposed sanctions,” Fitch Solutions said .
Risk Balance
In the report, the company noted that the risk balance for its outlook is “slightly to the downside.”
“The key risk comes from the weak outlook for Brent prices,” Fitch Solutions said in the report.
“In our 2023 gasoline price forecast of $2.70 per gallon, we have incorporated the assumption of an average annual Brent price of $95 per barrel and an average annual gasoline crack spread of 18.4 dollars per gallon Two months into 2023, we see crack spreads averaging $19.7 per barrel, which poses upside risk, albeit limited, as we believe spreads will narrow in the middle of the weakness in economic data given the mild recession expected in the US in the second half of the year,” the company added.
“At the same time, we are likely to revise down our Brent gasoline forecasts for 2023 given the lower-than-expected price level between January and February 2023. If we see Brent prices below $95 per barrel and crack spreads in line with our forecast we could see gasoline prices settle below our current forecast,” Fitch Solutions continued to note.
Retail price of gasoline
The oil and gas team at Fitch Solutions has previously highlighted this on Rigzone the relationship between RBOB and retail prices is useful for directional trends and volatility.
As of March 7, the price of regular gasoline in the US is $3.417 per gallon, according to the AAA gasoline price website. Yesterday’s average was $3.405 per gallon, last week’s average was $3.357 per gallon, last month’s average was $3.457 per gallon, and last year’s average was $4.065 per gallon , according to the AAA site.
GasBuddy’s real-time average for U.S. regular gasoline was $3.420 a gallon as of 4:30 a.m. EST on March 7, which the organization said was up 5.2 cents from yesterday’s average, but was down 64.1 cents from last year’s average.
According to the EIA’s latest fuel update, which was released on March 6, the price of regular gasoline fell from $3.379 per gallon on February 20 to $3.342 per gallon on February 27, before ‘increase to $3.389 per gallon on March 6. California was the biggest. expensive gas price, as of March 6, at $4.704 a gallon, while the Gulf Coast had the cheapest gas price, as of March 6, at $2.979 a gallon, showed the ‘EIA fuel update.
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