Forecast predicts oil prices to rise in 2023
Report: Oil prices expected to rise in 2023
FOX 26 Consumer Reporter Tom Zizka spoke with a Houston energy analyst about oil prices, which according to one report, has them going up this year.
HOUSTON - If you've noticed gas prices creeping back up, it's not your imagination. AAA says the national average $3.21 a gallon is up 11 cents from a week ago. A new local forecast suggests those higher prices may be just beginning.
As 2022 came to a close, Houston energy analyst Andy Lipow penned a light-hearted oil-version of 'Twas the Night Before Christmas', writing, "The oil rigs were hung by the roadside with care, in hopes that the pandemic was no longer there."
As clever as it may be, Lipow believes the new year will not be a bargain for drivers, or for the producers who pull oil from the ground.
The new year begins with oil priced just over $80 a barrel, up almost $10 in the last three weeks, because demand is growing and there is pessimism about meeting it.
"The market is concerned with the supply side of the equation, and whether there's going to be enough crude oil coming out of the ground, to meet increased demand around the world," says Lipow.
Concern comes from a variety of sources: While China eases COVID restrictions, there is wide expectation that returning workers and drivers will eat into supplies. In Europe, Russia's ongoing war in Ukraine is bringing a new round of sanctions and price caps that should reduce available sources of oil, as will OPEC production cuts that are helping prop up prices. In the U.S., oil added to the market from the Strategic Petroleum Reserve has reduced stockpiles to their lowest point since 1984, and must now be replaced, while the nation's oil producers have ramped-up as much drilling as they can, for now.
"These drilling companies are faced with their inability to get more workers, more truckers to those well-sites, to get more frack-sand and more drill pipe," says Lipow. "Our increases in additional production are going to slow down in 2023."
There is some 'encouraging' news that Texas refineries, briefly taken offline during the Christmas weekend freeze, are replacing the two million barrels of fuel a day that was lost.
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In the short-term, Lipow predicts prices will rise another 10 cents in the next couple weeks, and oil will settle in at about $90 a barrel, by the end of the year, leaving prices at the pump somewhere between what we see today and the worst of 2022's price spikes.