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Gas prices could go above $6 per gallon nationwide by August, say JPMorgan analysts.
The national average US retail gasoline price is already at a record $4.598 a gallon, up about 51% year over year, according to AAA.
With expectations of strong driving demand this summer, "U.S. retail price could surge another 37% by August to a $6.20/gal national average," writes Natasha Kaneva, head of the global commodities strategy team at JPMorgan.
The analyst and her team highlight refiners typically produce more gasoline ahead of the summer road-trip season to build up inventories. But since mid-April, U.S. gasoline inventories have fallen counter seasonally, sitting at their lowest levels since 2019.
"A major driver in these counter-seasonal draws in gasoline is higher-than-normal exports," writes Kaneva.
If elevated exports persist and refinery runs continue as expected, "gasoline inventories could continue to draw to levels well below 2008 lows and retail gasoline prices could climb to $6/gal or even higher."
Americans are already feeling the pinch from pump price sticker shock amid red-hot inflation and oil prices above $110/barrel. California's state average for gasoline already exceeds $6 per gallon.
The only way to stop rising gas prices is through demand destruction, CIBC Private Wealth U.S senior energy trader Rebecca Babin recently told Yahoo Finance Live.
The U.S. has been releasing oil from the national stockpile to alleviate prices at the pump. But prices are still going up.
“It comes down to this refining capacity that we have,” said Babin. “We have this massive disconnect between having a lot of crude and not having enough product because we don’t have the refining capacity."
Ines is a markets reporter covering equities. Follow her on Twitter at @ines_ferre