Declining gas and oil prices in recent months have been good news for just about everyone — except the Organization of Petroleum Exporting Countries (OPEC). OPEC is so unhappy about the trend that the group and its allies, known as OPEC+, have decided to keep curtailing output as a way to drive prices back up again. Whether that will work remains to be seen.
On Sunday, OPEC and other major oil producing nations, including Russia, announced that they would continue to cut supplies by 2 million barrels a day, CNN reported. That maintains a policy set in October — to the chagrin of many, including President Joe Biden — and is expected to continue through the end of 2023.
OPEC+ said in a statement that while it had reaffirmed its October decision, it is ready to meet at any time to “address market developments if necessary.”
OPEC+ also agreed to schedule its next meeting for February and the one after that for June, according to OilPrice.com. Previously, the group had been meeting every month to coordinate production. Fewer meetings could suggest that the current cap on production will remain well into the future.
The impact on oil and gas prices in the United States was not clear early on Dec. 5. Brent crude and West Texas Intermediate prices were both up by more than a percentage point from the Dec. 2 close, OilPrice.com reported. However, both remained well below $90 per barrel after trading close to $120 earlier in the year.
The average U.S. gasoline price was $3.403 a gallon early on Dec. 5 — well down from $3.546 a week ago and $3.797 a month ago, and creeping ever closer to last year’s average of $3.359 a gallon. Prices at the pump have sunk by nearly one-third since setting an all-time high of $5.016 on June 14, 2022.
Meanwhile, prices for other types of fuel were expected to tick higher this winter even before OPEC’s decision.
A report last month from the U.S. Energy Information Administration (EIA) projected that natural gas spot prices at the U.S. benchmark Henry Hub will average $6.09 per million British thermal units (MMBtu) this winter, which would be the highest real price (adjusted for inflation) since the winter of 2009-10. The projected price is up from $5.66/MMBtu in October but well below the peak of $8.80/MMBtu in August.
A separate EIA report released last week projected that residential propane prices will rise to an average of about $3 a gallon by March 2023 from about $2.67 in late November. Residential heating oil prices are expected to remain flat at an average of about $5 a gallon.
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This article originally appeared on GOBankingRates.com: OPEC Will Not Increase Oil Production — What Will That Mean for Gas and Heating Oil Prices?