- Gasoline prices in the US have fallen to $3.90 a gallon in the past week, according to AAA data.
- But gas prices will soon find a floor before spiking later this year, Bank of America warned.
- Inelastic gas demand means that any tightness in supply will cause prices to surge, its strategists said.
US gas prices at the pump are likely to spike again later this year as demand remains resilient while global supply falls, Bank of America has warned.
Its strategists said the same factors that caused gasoline prices to surge in June and July will soon lead to them reaching a trough, and then make a significant run-up in the fourth quarter of 2022.
"Gasoline prices should soon find a floor," a commodity and derivatives team led by Francisco Blach wrote in a recent note. "Summer dynamics may not repeat themselves exactly into year-end, but they could rhyme."
The average price of gas has eased in recent weeks after topping $5 a gallon across the US in July. The pump price fell a nickel over the past week to $3.90 a gallon, according to data from the American Automobile Association.
That drop in gas prices is credited for a July surprise cooling in US headline inflation. The rate is closely watched by investors for clues to the Federal Reserve's approach to interest rate hikes, which can influence stock markets.
But Bank of America said its analysis of consumer spending data showed that demand for gas has remained inelastic — meaning that Americans will fill their auto's gas tank regardless of price, rather than driving less.
"Our price elasticity estimates suggest US gasoline demand could still expand by about 0.35 million barrels a day or 4% into the fourth quarter of 2022," its team of strategists said.
That suggests prices will spike if there's any tightness in supply of gas or if crude oil prices rally, they added.
"Global gasoline supply has been down 0.3 million barrels a day relative to 2019 in the past 3 months, a factor that could support prices in the fourth quarter," Blach's team said.
Bank of America also forecast that Brent crude oil will climb another 2.7% to trade at $100 a barrel by the start of the fourth quarter, and predicted that WTI crude oil will jump another 4% to $95 a barrel.
Oil benchmarks have climbed steadily over recent days, with Brent crude up 4.8% since Thursday and WTI crude rising 5.3% in the same period.
Read more: US gas prices will jump back to $4.35 soon because supplies are running low, Goldman Sachs says