Concerns about a global banking crisis took value off the price of crude oil last week and that's helping to keep a lid on retail gasoline prices. File photo by John Angelillo/UPI | License Photo
March 20 (UPI) -- Analysts on Monday warned that volatility may soon hit retail gasoline prices that have been kept in check by the lingering fear of a global banking crisis.
Travel club AAA listed a national average retail price of $3.44 for a gallon of regular unleaded gasoline on Monday, about 3 cents lower than this time last week. Prices would normally start to increase at this time of year as the weather warms up and refiners start to produce a type of gasoline that's more expensive to make, but broader financial concerns are thwarting any significant move higher.
"The broad concern over recent failures of the U.S. and global banking system has put enough downward pressure on oil prices that we saw a reprieve in rising gasoline prices in the national average last week," said Patrick DeHaan, the senior petroleum analyst for Chicago-based GasBuddy.
Swiss investment bank UBS announced during the weekend it was buying struggling Credit Suisse. The takeover followed the collapse of Silicon Valley Bank in California and Signature Bank in New York, both of which buckled because of a focus on start-ups and cryptocurrencies, as well as broader liquidity problems.
While market analysts are quick to point out these are not the same circumstances that caused major banks to collapse during the subprime mortgage crisis from 2007-2008, market indices were in heavy retreat last week and searching for direction early Monday.
Both the Dow and the S&P 500 posted modest gains at the start of trading Monday on Wall Street, though the tech-heavy NASDAQ was in negative territory. The price for Brent crude oil, the global benchmark for the price of oil, was even at the opening bell to trade at $72.93 per barrel.
Brent lost 11% of its value last week. As one of the largest components behind the price at the pump, the retreat is supporting consumers.
DeHaan, however, says it might not last as demand increases on the back of the end of winter.
Markets are volatile, with some state-level prices jumping on the switch to the summer blend of gasoline, he said, but a lot depends on what happens next in the broader economy.
"Should the outlook for the banking sector improve, we could again see gasoline prices race higher, while continued or additional distress could raise the possibility of a broader economic slowdown, keeping gasoline prices in check," he said. "Overall, there are a lot of possibilities."