Forecast of Fuel Prices in 2021

The price of fuel is impacted by many variables making predictions difficult. However, there are certain variables that are in play today, which allows us to extrapolate and extend those trend lines into the next calendar-year and interpret possible outcomes.

“With demand still significantly lower than historical averages and continued supply to carry through to 2021, prices will continue to remain relatively flat throughout the rest of 2020 and into 2021,” said Emily Candib, director – fleet products for Merchants Fleet. “Traditional demand expected to pick up in May-June and raise prices along with pressure on refineries to keep pace.” 

The price of fuel is very much influenced by supply-and-demand dynamics, which are forecast to improve in CY-2021.

However, entire segments of the macro-economy continue to be hobbled, in particular the aviation and vehicle rental industries, this reduced consumption will put downward pressure on crude oil prices. 

“We expect oil markets to remain volatile due to slow economic recovery.  We are still seeing constraints in travel from consumers and many businesses are keeping employees remote. This has led to a decreased demand in fuel and will continue if the pandemic worsens this winter,” said Lindsay Wood, product manager for Wheels.

Another reason why it is difficult to forecast fuel prices is because pricing dynamics are often dictated at a much larger geopolitical level.

“Geopolitical tensions are currently low; however, that could change quickly and negatively impact fuel supply and demand,” said Mark Atchley, senior supply chain manager for Enterprise Fleet Management. “The Organization of the Petroleum Exporting Countries (OPEC) will likely continue attempts to sharply increase fuel prices through production cuts. However, we expect fuel prices to continue experiencing modest growth in 2021 and remain below 2018 and 2019 levels.”