Fitch Solutions Lowers Gasoline Price Forecast

Fitch Solutions Lowers Gasoline Price Forecast
Fitch Solutions Country Risk & Industry Research has lowered its NYMEX RBOB gasoline price forecasts for 2022 and 2023.

Fitch Solutions Country Risk & Industry Research has lowered its NYMEX RBOB gasoline price forecasts for 2022 and 2023, a new report sent to Rigzone by the company has revealed.

The business now sees the commodity coming in at $3.00 per gallon in 2022, compared to a previous forecast of $3.20 per gallon, and $2.70 per gallon in 2023, compared to a previous forecast of $2.90 per gallon. Looking further ahead, Fitch Solutions sees the NYMEX RBOB gasoline price averaging $2.40 per gallon in both 2024 and 2025, and $2.20 per gallon in 2026.

The Bloomberg Consensus, which was also highlighted in the report, projects that the NYMEX RBOB gasoline price will come in at $3.08 per gallon in 2022, $3.07 per gallon in 2023, $2.82 per gallon in 2024, and $3.01 per gallon in 2025. There is no Bloomberg Consensus forecast for 2026 in the Fitch Solutions report.

“As expected, over Q322 and into Q422, gasoline prices have retreated from their Q222 highs,” Fitch Solutions analysts stated in the report.

“However, the decline in prices has been steeper than expected, which supports our downward revision of our 2022 annual average from $3.20/gal to $3.00/gal. Gasoline prices have declined by over 41 percent, falling from $4.27/gal in late June 2022 to $2.48/gal in mid-November 2022,” the analysts added.

“The YTD price averages at $3.05/gal and we expect prices to remain broadly stable over the remainder of the year given the seasonal demand weakness over Q422 in the northern hemisphere and healthy refining capacity,” the analysts continued.

The analysts stated that macro weakness expected in 2023 is a key driver behind its downward revision of its 2023 gasoline price forecast.

“The weakening demand for gasoline in some of the largest gasoline-consuming countries drives our increasingly bearish outlook,” the analysts stated in the report.

“Our Country Risk team now sees the global economic growth lingering at 2.0 percent year-on-year in 2023, down from 3.1 percent year-on-year estimated for 2022 and also down from our previous forecast from October 2022, when we saw 2023 global real GDP growth rate averaging at 2.1 percent year-on-year,” the analysts added.

The deceleration in global growth is expected to be driven by the developed markets, according to the Fitch Solutions analysts, who noted in the report that these markets will see growth declining from 2.5 percent year-on-year in 2022 to 0.5 percent year-on-year in 2023.

The oil and gas team at Fitch Solutions has previously highlighted to Rigzone 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 to Rigzone earlier this year. 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 at the time.

As of November 24, the U.S. average regular gasoline price is $3.586 per gallon, according to the AAA gas prices website. Yesterday’s average stood at $3.609 per gallon, the week ago average was $3.725 per gallon, the month ago average was $3.793 per gallon, and the year ago average was $3.398 per gallon, the AAA site showed.

The highest recorded average price for regular unleaded gasoline was seen on June 14 at $5.016 per gallon, the AAA site highlights.

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


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