* Inventories of fuel are dwindling on demand, refinery outages
* Prices could return to near three-year peak seen last summer
By Grant Smith
U.S. gasoline prices may approach $3 a gallon this summer as global oil markets are tightened by OPEC production cuts and geopolitical disruptions, Citigroup Inc. said.
The nation’s inventories of the fuel plunged the most since 2017 in early April, depleted by strong demand and shutdowns at refineries, data from the U.S. government showed this week. If crude continues to climb it could pull retail gasoline prices toward the three-year highs reached last summer.
“Three dollars a gallon retail gasoline is possible” if crude climbs toward $80 a barrel, Citigroup analysts including Ed Morse and Eric Lee said in a report. “Which would raise the ire of the White House.”
Oil prices advanced to a five-month high of almost $65 a barrel in New York earlier this week as cutbacks by the Organization of Petroleum Exporting Countries and its allies were compounded by crises in Venezuela, Iran and — most recently — Libya.
American gasoline inventories slipped below their five-year average after plunging by 7.7 million barrels to 229.1 million, data from the Energy Information Administration showed. Retail gasoline prices were at $2.784 a gallon on Thursday, according to the American Automobile Association.
Citigroup said they could climb to $2.85 or $2.90 this summer, when demand hits a seasonal peak amid increased driving for vacations.
A similar surge in gasoline a year ago prompted President Donald Trump to begin a war of words with OPEC on Twitter, accusing the cartel of keeping prices artificially high and demanding an output increase. The group bowed to those requests in 2018 by opening the taps, although its de-facto leader Saudi Arabia has shown less willingness to respond to the U.S. leader’s requests this year.
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