Petroleum products

Gasoline prices
We forecast U.S. retail gasoline prices will average about $3.60 per gallon (gal) in 2024, an increase of about 10 cents/gal from our March STEO and a slight increase from the average price in 2023. This increase is driven by rising wholesale gasoline prices compared with the March STEO as well as higher crude oil prices. We now forecast the wholesale gasoline price will average more than $2.70/gal in 2024, also 10 cents/gal more than in 2023. The higher forecast wholesale gasoline prices compared with our March STEO reflects our expectation of more gasoline exports and lower gasoline inventories, leading to an increase in the 2024 annual average crack spread for gasoline relative to last month’s forecast.

We expect higher crude oil prices will put additional upward pressure on the gasoline price this year compared with 2023. Our forecast that crude oil prices in 2024 will be higher than we expected last month is responsible for about half of the increase in average 2024 gasoline prices compared to the March STEO. Retail and distribution margins for gasoline—the difference between the average retail price and the refiner price for resale—were lower in February and March compared with the same months in 2023. Retail and distribution margins can reflect a wide variety of factors including taxes, wages, and regional and logistical complications. We forecast these lower retail margins to dampen the effect of higher crude oil prices and crack spreads on overall retail prices this year. Retail and distribution margins can be volatile, and they present a source of uncertainty for retail gasoline prices this summer and through the rest of the year; higher margins than we expect could lead to higher gasoline prices.

Gasoline inventories and net trade
We have reduced our forecast for end-of-period motor gasoline stocks by almost 7 million barrels in 2Q24 compared to the March STEO. Our outlook for gasoline inventories has gradually decreased since the beginning of 2024 as lower refinery production and higher net exports (exports minus imports) of gasoline have contributed to stronger-than-expected inventory draws so far this year. As a result, we now expect end-of-month gasoline inventories to average about 4 million barrels lower throughout 2024 compared with our previous forecast, contributing to tight market conditions for gasoline during the summer.

Data from our Weekly Petroleum Status Report show higher gasoline net exports so far this year, which led us to revise our outlook for gasoline trade compared with our last forecast. We expect gasoline net exports to increase slightly from 2023 levels this year. Damage related to Ukraine’s attacks on Russian refineries will contribute to slightly lower international supplies because of reduced Russian production. We estimate this will have a relatively limited impact on global gasoline availability because Russian refiners tend to produce significantly more diesel than gasoline, and because increasing liquid fuels production at new refineries in the Middle East will partially ease international supply pressures. However, further constraints on global gasoline availability could increase gasoline net exports from the United States this year, presenting further uncertainty for our U.S. gasoline forecast.