Gasoline prices hit 2023 highs this week as US crude topped $90 per barrel for the first time since November of last year.
The national average for gas, according to AAA, reached $3.87 per gallon on Friday, just as Hurricane Lee was heading toward northern New England. But there's likely good news ahead for consumers: Analysts think prices will come down due to use of winter-grade gasoline, which costs less to make.
Barring significant disruptions from Hurricane Lee, Tom Kloza, global head of energy analysis at OPIS, told Yahoo Finance, gas prices are likely peaking. He added that "we'll likely see prices ease a bit at the pump even if crude stays in the $90/bbl neighborhood."
Andy Lipow of Lipow Oil Associates echoed a similar sentiment.
"In the next five days I expect gasoline prices to tick on up a few cents, but afterwards consumers east of the Rockies will benefit from the lower priced winter-grade gasoline and we should see about a $0.10 per gallon decline in those markets," Lipow told Yahoo Finance.
The exception would be California, where the average price of gasoline currently hovers around $5.52 per gallon.
"Unfortunately if you are in California, the winter-grade gasoline does not go into the distribution system until Nov. 1," added Lipow.
Higher gasoline prices are raising concerns of a negative impact on the broader economy and consumer spending.
"Research shows consumer sentiment becomes more pessimistic with rising gas prices — and as consumers become less certain about their financial prospects, they tend to rein in their spending," Mike Dickson, head of research and product development at Horizon Investments, said in a recent note to clients.
Energy prices, specifically gasoline, were the biggest culprit of August's hotter-than-expected inflation print released on Wednesday.
"The index for gasoline was the largest contributor to the monthly all-items increase, accounting for over half of the increase," read the CPI release.
Prices for other products derived from oil, such as jet fuel, are also rising. On Thursday, Delta (DAL) warned of lower profits due to higher maintenance and jet fuel costs.
The airline now expects a quarterly earning in the range of $1.85 to $2.05 per share, versus a prior forecast of $2.20 to $2.50.
American (AAL), Spirit (SAVE), United (UAL), Southwest (LUV), and Alaska Air (ALK) recently issued similar warnings, too.
Crude has been on an upward trend over the past three months. West Texas Intermediate (CL=F) rose by about $22 per barrel since late June to just above $90 per barrel this week.
Brent crude futures (BZ=F) have seen a similar rise of more than 30% over the same period, hovering at above $93 per barrel on Friday.
"I expect crude oil prices to remain above $90 per barrel as OPEC+, and specifically Saudi Arabia, seek higher prices to balance their domestic budget," added Lipow.
Oil's recent rally prompted RBC Capital Markets to float the possibility of $100 per barrel amid "a momentum-based" market.
“The notion of $100/bbl has evolved from completely unimaginable a few short months ago, to within striking (or hyping) distance today,” analysts Michael Tran and Helima Croft wrote in a note to investors.
Saudi Arabia recently extended its unilateral production cuts for the next three months. Russia also reduced its exports by 300,000 barrels per day through year-end. These cuts are in addition to OPEC+ reductions that started at the end of last year.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre.
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