Fitch Solutions Raises Gasoline Price Forecast

Fitch Solutions Country Risk & Industry Research has increased its RBOB NYMEX gasoline price forecast from $1.95 per gallon to $2.20 per gallon for 2022, a new report sent to Rigzone has revealed.

The report outlined that Fitch Solutions sees RBOB NYMEX gasoline futures at $2.14 per gallon in 2023, $2.11 per gallon in 2024, $2.14 per gallon in 2025, and $2.12 per gallon in 2026. The company highlighted that the commodity was valued at $1.18 per gallon in 2020 and forecasted that the RBOB NYMEX gasoline price came in at $2.10 per gallon in 2021.

Fitch Solutions’ price forecasts were notably below the Bloomberg Consensus, which was also highlighted in Fitch Solutions’ latest report. This consensus sees RBOB NYMEX gasoline prices at $2.69 per gallon this year, $2.71 per gallon in 2023, $2.70 per gallon in 2024, and $2.66 per gallon in 2025. A Bloomberg Consensus forecast for RBOB NYMEX gasoline for 2026 was not shown in Fitch Solutions’ report.

“We have revised our RBOB NYMEX gasoline price forecast from $1.95 per gallon to $2.20 per gallon for 2022, as elevated oil prices coupled with strong demand drive gasoline benchmarks to new highs,” Fitch Solutions analysts stated in the report.

“The RBOB NYMEX gasoline price benchmark continues its surge into 2022, with daily prices for January averaging at $2.42 per gallon and testing $2.70 per gallon in early February. We point out a growing risk of an even tighter gasoline market in Q2-Q322, with elevated crack spreads as the summer seasonal effect comes into play,” the analysts added in the report.

“On the supply side, we note tightness on the market with low crude oil stocks in the U.S. and some risk of production disruptions. Although we remain bullish over the near term, we expect gasoline prices to cool off over H222 allowing the annual benchmark to average below current spot prices,” the analysts went on to state.

In the report, the analysts noted that, in their view, gasoline prices will likely follow the Brent crude benchmark, which they now expect to average $76 per barrel in 2022.

“We expect that 2023 will bring a slight drop in gasoline prices, from $2.20 per gallon in 2022 to $2.14 per gallon next year, as demand growth slows and new refining capacity comes online, resulting in oversupply,” the analysts stated. 

“From 2024 onwards, we maintain a bearish outlook for gasoline prices as energy transition efforts weigh on the demand while supply grows on the back of new capacity coming online,” the analysts added.

The oil and gas team at Fitch Solutions highlighted that the relationship between RBOB and retail prices is useful for directional trends as well as volatility. Retail prices are a mix of taxes, local blending requirements, profit margin, and delivery costs, as well as other factors, and retailers purchase supply at varying amounts from both spot and futures contracted volumes, the Fitch Solutions team outlined. RBOB, being the only widely traded spot and futures contract, provides a good proxy for future pricing trends and the ability to secure supply at a fixed price as the contracts are physical, the team said.

As of February 15, the U.S. average regular gas price was $3.498, according to AAA, which outlined that the year ago average was $2.507.

To contact the author, email andreas.exarheas@rigzone.com