Market Overview

Pains At The Pump, Gains For Oil Investors: The 2018 Gas Outlook

Pains At The Pump, Gains For Oil Investors: The 2018 Gas Outlook
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Gas prices have been creeping higher throughout the holiday season, and the latest projections from GasBuddy suggest the trend could continue throughout 2018. Gas prices will likely be the highest this year that they have been since 2014, said GasBuddy analyst Patrick DeHaan. 

GasBuddy projects U.S. gas prices will increase an average of 19 cents per gallon in 2018 and average $2.57 on the year. Prices will be nowhere near record levels and will remain below $3 in most of the country barring any major disruption, DeHaan said.

Major cities such as Chicago, Los Angeles and New York could be consistently shelling out $3 per gallon this year, according to the forecast. 

For Americans wondering why gas prices are on the rise, DeHaan said OPEC’s production cuts are the primary driver. OPEC cuts have lowered oil inventories by nearly 50 million barrels compared to one year ago.

“Yet, understanding many factors, including OPEC, fuel taxes, the economy and their impact on supply and demand is integral to providing a thorough and balanced outlook on gas prices for 2018,” DeHaan said.

Drivers should also be aware that the price spreads among different gas station competitors have also been on the rise, meaning drivers could be paying more for gasoline if they don’t shop around.

“It’s become nothing short of crazy how one station might sell gasoline 20-40 cents lower or higher than a nearby competitor,” he said.

One group of investors are perfectly happy to see gasoline and oil prices on the rise. In the past six months, the United States Oil Fund LP (ETF) (NYSE: USO) is up 29.2 percent and the United States Gasoline Fund, LP (NYSE: UGA) is up 31.8 percent.

Related Links:

This Day In Market History: OPEC Raises Oil Price To $7 Per Barrel

The End-Of-The-Year Oil Trade Is Spreading To Leveraged ETFs

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