‘We could see $5 a gallon’ as Russia-Ukraine war continues, strategist says
If the conflict between Russia and Ukraine is not resolved soon, a strategist expects the average price of gasoline during the peak season to be $5 a gallon, a strategist says.
“If the situation in Russia/Ukraine continues like this, oil prices are likely to stay.” [at] $100+,” Scott Bauer, CEO of Prosper Trading Academy, told Yahoo Finance Live on Monday.
“We are meeting the busiest demand – the peak – coming summer time,” he added. “If tensions continue, I think you’ll easily see $5 a gallon in peak demand by Memorial Day.”
According to AAA, the average cost of gasoline in the US is currently $4.25. States like California have already seen prices above $6.
On Monday, prices of West Texas Intermediate (BZ=F) and Brent International (CL=F) fell about 7% on concerns about a slump in demand after China imposed lockdowns in Shanghai. China is the largest importer of crude oil.
“In the short term, it will determine the amount that China will export,” says Bauer. “But I think it’s very, very shortsighted, that people think this is going to take a very long time, or really have an impact on the oil market beyond maybe 30 or 60 days later,” Bauer said.
“I’m not saying oil can’t go lower here, especially if we get positive news from Russia/Ukraine,” he added. “But in terms of just the lockdowns, I think this sell-off is a bit of an exaggeration.”
“For me it’s not what happens in China, it’s really all about what happens in Russia/Ukraine,” he added.
On Tuesday, oil prices fell more than 4% amid ongoing talks between Russia and Ukraine. Optimism about a peace deal caused raw materials to decline.
Oil prices rose before the start of the war between Russia and Ukraine in late February. The invasion pushed crude oil prices above $100 a barrel amid Western sanctions against Moscow and what analysts are calling a “de facto ban” on Russian crude.
Ines is a market reporter on equities. Follow her on Twitter on @ines_ferre
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