Yahoo Finance's Kristin Myers and GasBuddy Head of Petroleum Analysis Patrick De Haan discuss gas prices heading into Labor Day weekend.
KRISTIN MYERS: Looking over at oil, down over half a percent right now. So let's keep that conversation going. We are joined now by Patrick De Haan, GasBuddy head of petroleum analysis. Patrick, you know, the last time I had been chatting oil on this show is just two weeks ago.
I mean, we've been talking about the OPEC forecast. Worse than previously feared for the year. For 2021, had remained unchanged. Since then, however, we've seen Hurricane Laura. I'm wondering what you are predicting for oil prices ahead of Labor Day and into next year.
PATRICK DE HAAN: All the more impressive that for the last nine weeks or so, we've been stuck in this range of $41 to call it $43 a barrel. Where we go from here on out-- well, we're continuing to watch the recovery from coronavirus not only in the US, but global economies.
Oil demand here in the US is starting to sneak up, though, of course, with the end of summer driving season here in the US, we do have some headwinds that are going to start blowing fairly strongly. Gasoline demand tends to ease up in the US after the conclusion of Labor Day weekend. So oil may be hard pressed to find a strong footing to continue a rally this year barring any sort of major breakthrough with coronavirus like a potential vaccine.
KRISTIN MYERS: Are you seeing any upside, really, for gas prices going forward?
PATRICK DE HAAN: I think moving forward, Hurricane Laura really was a small catalyst for prices. That's why we saw the national average perk up here by about $0.04 a gallon in the last week. It stands now at its highest level since March. But with the conclusion of Labor Day weekend, we will likely see gasoline demand go down.
And, really, looking at our pay with GasBuddy data on gasoline demand, which looks at the retail level, we are now on our second straight week of demand that's fallen off ever so slightly, down about 2% week on week. So gas prices should start to lose momentum before they start declining maybe $0.10 to $0.20 a gallon by Halloween.
KRISTIN MYERS: So I know that you're talking about the demand right now declining going forward, but I'm curious to know just because we're seeing people getting a little bit restless because they've been stuck in their homes. They've been finding to travel. Folks are chomping at the bit, checking which countries they could possibly visit.
More and more countries are opening up. We are seeing airlines see more and more passengers. Is there at all any kind of hope that going into this holiday season that people are just so fed up of being at home that they're actually just going to take to the road and take to the air?
PATRICK DE HAAN: I think we've almost been seeing the behavior describing this cabin fever stronger now than we usually get at the conclusion of winter. So there is a tremendous interest in getting out, but I'll note that a lot of airlines are still kind of in this cutback mode. They still have very liberal cancellation policies. That reflects that there's a lot of people that are still very nervous.
And, of course, like you mentioned, travel restrictions acting as a big headwind on jet fuel demand. Of course, if you can't go to Europe, if you can't go to Asia, jet fuel demand is really anemic across the board. And, actually, that's one of the products out of a barrel of oil that's faced the most challenges.
So there is interest there. I think we continue to see US coronavirus cases go down. That may be positive. But now, of course, in Europe, they've seen an upswing. So how long are we going to have this looming over us? It could be many months before we see notable improvement.
KRISTIN MYERS: So we've seen that the US supply had been declining for quite some time, of course, easing the global glut. Do you see that trend continuing for much longer?
PATRICK DE HAAN: I think so. Now, keep in mind we've just had Hurricane Laura, which shut down potentially hundreds of rigs in the Gulf of Mexico, which limited oil production here in the US the last few weeks. That should keep oil inventories from really seeing a big surplus again. Last week, oil inventories, by the way, declined close to 5 million barrels. So combined with the increase in demand from several months ago, we're starting to chisel away at some of those surplus inventories.
But, again, heading into the fall, we could start to see those numbers go back up. And, of course, OPEC continues to closely monitor the situation. They want to ease up. I think OPEC is very happy with oil prices where they are. It's not high enough to justify US producers getting back online, but it's low enough to incentivize consumers to start returning to the road. So that's an interesting dynamic to keep an eye on as well.
KRISTIN MYERS: All right. Patrick De Haan, head of petroleum analysis at GasBuddy. Thanks so much for joining us today.
PATRICK DE HAAN: My pleasure.