Despite gas prices having dropped about 70 cents on average over the past month, investment bank Goldman Sachs predicted prices will soon rise again.
The reason for the increase, the investment bank said, is due to supply shortages and sustained high demand.
"Our updated fundamental forecasts point to continued disappointments in supply, with demand instead supported by the still ongoing COVID-19 reopening and gas-to-oil substitution," Goldman said in the report. "This requires demand destruction on top of the ongoing economic slowdown, requiring high retail fuel prices to end the market deficit."
Political ImpactRising prices are sure to negatively affect the Biden administration, which has tried to capitalize on marginal drops in gas prices. The White House also claims that it is because of actions the administration has taken—including releasing oil from the Strategic Petroleum Reserve—in recent months.
At the same time, Biden has increasingly criticized and targeted large oil corporations, claiming they're gouging consumers by artificially keeping prices higher. But the heads of ExxonMobil and Chevron refuted Biden's claims and said the administration has persisted in maintaining a relatively hostile environment for oil firms to do business.
On Monday, oil prices hovered near multi-month lows that erased earlier gains. Brent crude futures were down 55 cents, or 0.6 percent, at $94.37 a barrel by Monday morning. U.S. West Texas Intermediate crude was at $88.25 a barrel, down 76 cents, or 0.9 percent.
"Last week’s price action left no doubt that recession-driven demand concerns have the upper hand over supply fears. One could even go as far as saying the war premium has evaporated," PVM analyst Stephen Brennock said.