Small bounce in gas prices expected from Saudi production cuts

June 5 (UPI) -- Retail gasoline prices in the U.S. market continue to dip lower and any bump higher from the hike in oil prices that came as a result of Saudi production restraint will be minor, a petroleum market analyst said Monday.

Crude oil accounts for the bulk of what consumers pay at the pump, with state-by-state variances coming largely from taxes and transportation costs. The price for Brent crude oil, the global benchmark for the price of oil, was up 2.2% as of 9:30 a.m. EDT to trade at $77.78 per barrel.

The rally was triggered by decisions made at a weekend meeting of OPEC+, the core members of the Organization of the Petroleum Exporting Countries and their non-member state allies such as Russia.

Recent bickering over production levels between Saudi Arabia and Russia caused many analysts to question if a coordinated approach was possible. To that end, Saudi Arabia opted for a voluntary cut of 1 million barrels per day starting in July.

Saudi Arabia needs Brent at around $80 per barrel to balance its books.

Patrick DeHaan, the senior petroleum analyst at Chicago-based GasBuddy, said gasoline prices could follow the direction in oil prices as early as this week.

"How long any rise in gas prices lasts is up in the air, but I do not yet believe motorists need to be worried," he said. "Any rise in average prices should be fairly small, and we're still extremely unlikely to make a run at record prices anytime soon."

Travel club AAA on Monday put the national average retail price at $3.55 per gallon, down 3 cents per gallon from week-ago levels and $1.30 less than this time last year.

Demand, meanwhile, may be dropping off after the long Memorial Day holiday weekend. Between May 28 and Saturday, June 3, DeHaan said demand was 2.3% lower than during the similar period before the holiday weekend.

The federal government in a market report for May put the 2023 average retail price at $3.33 per gallon. A revised estimate comes out Tuesday.