Save $4 on your US pump price. Goldman Sachs predicts that $5 gasoline is coming back.

Goldman Sachs

Last week, the average U.S. gasoline price dropped to $4 per gallon. Goldman Sachs expects them to rise to $5 by the end of the year. Brent crude oil rises to $130 per barrel as the market seeks to balance tight supply and rising demand.

These are the prices at which “we must see sustained prices to eventually solve our market gap,” says Damien Courvalin (Goldman Sachs head of energy research).

Goldman predicts that crude oil demand will increase as the economies reopen, and power generators and workers switch to natural gas. As refiners enter maintenance, there is a shortage of gasoline and diesel inventory buffers. This limits supply.

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This warning is part of a wider warning by Goldman Sachs about a commodities markets that “hold unreasonable expectations”, as prices drop together, inventories fall together, demand beats anticipation and supply disappoints,” Jeffrey Currie from Goldman’s commodities research department said this week.

Brent crude oil rose 3.4% and was at $98.15/bbl. WTI gained 3.5% to reach $92.09/bbl.