Gas price rally inching 'closer to a top': GasBuddy analyst

GasBuddy analyst Patrick De Haan noted on "Varney & Co." on Monday that demand for gas "continues to go up," but argued that he is "starting to feel like we are getting closer to a top" in the price rally.

The GasBuddy head of petroleum analysis told host Stuart Varney that he thought gas prices will increase by 5 to 15 cents over the summer, but said he is now "backing off a little bit of that."

De Haan also pointed to other predictions that gas prices would increase by 10 to 20 cents. 

Last week, AAA warned that drivers can expect gas prices to increase another 10 to 20 cents through the end of August, bringing the national average to more than $3.25 this summer.  

Jeanette McGee, a AAA spokesperson, attributed the rise in gas prices to "robust gasoline demand and more expensive crude oil prices." 

The last time crude was more than $76.40 was in November 2014 and the last time the national average was at $3.25 was in October of that year, according to AAA. 

OIL PRICES SPIKE TO 6-YEAR HIGH

As of Monday, the national average for gas was $3.15, which is 95 cents higher than the same time in 2020, according to AAA. 

Oil traded down over 1% on Monday to $73.62 per barrel.

De Haan noted that over the July 4 holiday weekend "we saw very high demand," and pointed to data from the Energy Information Administration (EIA).

A GasBuddy news release on Friday pointed to highlights from the EIA’s weekly report, noting that gas supplied to the market amounted to 10.04 million barrels per day and that so far in 2021, implied demand, or "products supplied," is 10.3% higher compared to the year before.

De Haan told Varney that implied demand hit "an all-time record since the EIA started tracking that data set back in 1991."

On Monday, AAA also pointed to the EIA record reached last week, emphasizing that the 10 million b/d number, "only partially reflects Independence Day holiday weekend travel." 

AAA pointed out that the nearly 1 million barrels per day increase in demand reduced gasoline supplies by 6.1 million barrels to 235,000 million barrels and, therefore, pushed the national average price for gas up to $3.14. 

The association also noted that the price of crude oil fluctuated last week due to OPEC’s failure to reach an agreement on production increases, which "continues to be a dominant factor in determining how high prices will go this summer." 

"By all measures, demand was off the charts, but I’m starting to feel like we are getting closer to a top, maybe in the eighth or ninth inning of this gas price rally," he continued, pointing out that he believes "there’s a little bit more room to go, but I think we’re just about there."

He then pointed out that based on current demand figures, "we may see prices start to stabilize." 

De Haan then said he believes oil prices could drop back to $70 if technical aspects are removed, which he noted "is a possibility."

On Monday morning De Haan expanded on his sentiment tweeting, "After a brisk May and great June, I'm starting to feel like we're going to see gasoline demand relax a bit more." 

"I think we've seen our peak (July 4), and it's unlikely we'll exceed it," he continued, pointing out that as a result, he thinks a peak in gas prices may be sooner than late July or early August. 

In a later tweet on Monday, De Haan noted that U.S. gas prices have been slowly declining over the last few days, however, "it's too early to say if it'll last." He then stressed "we're likely dancing close to our peak." 

AAA believes crude prices have the potential to increase this week, which will only lead to more expensive prices at the pump, especially amid robust demand.

On the week, about 25 state averages increased by at least two cents with a few seeing a jump of nine cents or more, according to the association, noting that state averages range from as low as $2.76 in Mississippi to as much as $4.31 in California.

De Haan told Varney on Monday that he thinks "the anti-fossil fuel movement" enhanced through President Biden’s orders aimed at tamping down the U.S. fossil fuel industry and combating climate change, is contributing to the rising price of gas by restricting the supply of oil from the United States.

The gas analyst pointed to states like California and New York and the "divesting of fossil fuel publicly traded companies." 

"That’s probably hurting those companies from bringing production back online or at least changing their agenda," he said. 

"We’re still about two million barrels a day lower compared to pre-COVID production."

He went on to say that he "absolutely" believes that "the anti-fossil feel movement" has something to do with "how slowly oil companies are ramping back up" production. 

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De Haan also pointed to the "dissention amongst OPEC members" as another contributing factor affecting supply and therefore, gas prices. 

The cartel, which includes Russia, failed to agree to raise oil production by the expected 500,000 barrels a day until the end of the year as oil demand is rebounding at a faster than expected rate from the COVID-19 dip.

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FOX Business’ Phil Flynn contributed to this report.