AAA: Gas prices inching upward

Higher crude oil costs have pushed gas prices upward in recent weeks.  Friday’s average price of $2.51 per gallon is eight cents higher than one week ago and nine cents higher than one month ago.  Yet despite recent increases, consumers continue to benefit from substantially lower gas prices compared to recent years, with Friday’s national average representing a $1.18 per gallon savings over year ago prices and the least expensive average for April 24 since 2009 ($2.06).

West Texas Intermediate (WTI) crude oil prices settled at the highest level in nearly four months this week, just shy of $58 per barrel.  The market weighed potential geopolitical concerns in the Middle East and a weakening U.S. dollar.  Domestic oil prices are more than $10 per barrel higher than a month ago, which has contributed to higher gas prices.  Planned and unplanned refinery problems also continue to affect the market and may continue to impact prices heading into the summer driving season.  In addition, global oil prices continue to reflect volatility and industry stakeholders remain divided over where supply and demand fundamentals will send prices.  Attention is focused on high-cost production countries like the U.S., where new production has been a key contributor to the sharply lower price of crude.

With the price of WTI nearly fifty percent lower than the same month last year, more expensive production sources face pressure to remain economically viable in a dramatically different pricing environment.  At the close of Friday’s formal trading on the NYMEX, WTI crude oil settled at $57.15 per barrel, up 2.5 percent on the week.

The Energy Information Administration (EIA) noted in its weekly report that crude oil inventories saw a 5.3 million-barrel-build to 489 million barrels, marking the 15^th consecutive week of builds and running at a surplus of closer to 92 million barrels to 2014.  Gasoline stocks dipped 2.1 million barrels to 225.7 million barrels.  Gasoline demand rebounded to 9.185 million barrels per day (bpd), an increase of 270,000 bpd, representing a roughly nine percent increase over last year.

“Crude prices continue to reach 2015 highs, reflected in recent increases at the pump,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic.  “In addition, gas prices typically inch upward this time of year due to the seasonal changeover to the more expensive summer-blended gasoline.  However, record high domestic oil production is likely to deliver the cheapest summer gas prices in a decade.”

Gas prices are likely to inch upward until the beginning of next month, as stations make the switch-over to summer-blended gasoline as mandated by the Environmental Protection Agency (EPA) to occur by May 1.  After May 1, and barring any unforeseen geopolitical issues that would affect crude oil prices or any refinery issues, prices at the pump will likely begin to retreat.  Gas prices are expected to remain $1 a gallon lower than last summer.

CURRENT AND PAST GAS PRICE AVERAGES

Regular Unleaded Gasoline (*indicates record high)