Crude oil prices are pulling back while still remaining elevated. Coming off of the summer's cyclical demand highs, what should consumers be expecting for gas prices for the rest of 2023? Patrick De Haan, GasBuddy Head of Petroleum Analysis, joins Yahoo Finance Live to explain which direction gas prices are moving based on regional trends and seasonal demand heading into the fall 2023 season.
"Because of that maintenance, the West Coast has been really the only region of the country that's seen prices going up," De Haan explains. "Everyone else, the refinery maintenance is being offset by seasonally weak gasoline demand."
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JULIE HYMAN: Patrick, we've been talking about oil fundamentals generally. Let's zero in on gasoline a little bit more squarely here because I've been seeing that the refinery maintenance season is expected to be pretty tough. A lot of capacity is going to be taken out of the market. What effect do you see that having on refined products like gasoline?
PATRICK DE HAAN: Well, something to keep a close eye on. And because of that maintenance, the West Coast has been really the only region of the country that's seen prices going up. Everyone else, the refinery maintenance is being offset by seasonally weak gasoline demand. Now here in the last week, according to our data, gasoline demand is looking a little stronger, a little bit closer to what I would expect. But that's certainly a big wild card, especially for the Northeast.
There's a lot of refinery turnarounds happening across the country. But the Northeast sees it very acutely because of the loss of PES back in 2019. If any of this maintenance, especially in the Northeast, goes long, look for distillates to be impacted that we haven't seen a high level of imports coming in. And with refinery maintenance happening at Irving Oil up in New Brunswick, that certainly could spark a rally in the price for distillate. But I think gasoline demand-- we're looking a little bit bearish in terms of soft gasoline demand.
So I wouldn't think the turnaround season would look too heavily, although refineries are going to have to produce gasoline to chase distillate yields. And that could inadvertently push down gasoline prices at the same time. So certainly something to keep an eye on.
JOSH LIPTON: And Patrick, how much higher are gas prices right now than they were before the pandemic, because I think that's what a lot of people probably react to when they go to the local station and they top off the tank. It still feels higher to them than maybe it was not too long ago.
PATRICK DE HAAN: Yeah, absolutely. These are still above average prices. Americans still grimace when they drive by the gas station and see these high prices. And again, I think the Biden administration has been carefully watching this for that. They know Americans are sick and tired of high gas prices.
But again, there's not much they can do about that. I do think that by the end of the year, the national average could decline [? $0.25 ?] to $0.50. And again, there's a lot of refinery maintenance concerns still there. We're still in the peak of hurricane season, or moving just beyond it. So there's still some wild cards to be had.
But I do think as these refinery issues move into the rear view, I do think there's going to be some solid downward pressure on gasoline prices, and again going into November. But it's going to get ugly potentially next spring, especially when you throw in OPEC's production cuts. We could really see gasoline prices pinched next year going back up. If this refinery maintenance drags along, that could certainly tighten global inventories further.