AAA: Gas prices continue upward trend
Prices at the pump increased slightly this week amidst national and international economic volatility. The national average for regular grade gasoline reached $3.71 Friday, up a penny from last week, up 17cents from a month ago and 97 cents higher than year-ago prices. Gas prices remain 40 cents below the all-time record high of $4.11/gallon set in July 2008.
Crude oil trended downward this week as traders and investors awaited a resolution to the U.S. debt situation ahead of the August 2 deadline to avert an unprecedented debt default by the world’s largest economy. Also contributing to the downward trend was the relative strength of the U.S. dollar and virtually flat gross domestic product (GDP) data. Oil did see brief bumps due to news from the U.S. Labor Department showing applications for unemployment benefits fell by 24,000 to 398,000 last week, the lowest level since April, and news from the housing markets that previously owned home sales rose unexpectedly in June, both indicators that demand for oil could be on the rise. Crude oil closed at $95.70 Friday, down 4 percent on the week.
In its weekly report, the U.S. Energy Information Administration (EIA) data showed crude stocks rose 2.3 million barrels to 354 million barrels, ending seven consecutive weeks of declines. Gasoline stocks rose 1 million barrels to 213.5 million barrels. The EIA also reported total petroleum demand was 18.426 million barrels per day (bpd), 428,000 bpd lower than the previous week and 1.2 million bpd below the same week in 2010. Petroleum demand for the past four weeks totaled 18.756 million bpd, down 2.9 percent from last year. Gasoline demand for the past week dropped below 9 million barrels per day (bpd) to 8.99 million bpd.
“Despite mid-summer increases, gas prices remain 10 cents below where they were at the start of the summer driving season (Memorial Day weekend),” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “The upward trend in recent weeks is directly related to the upward movement of crude oil prices, which have been affected by national and international financial situations. As some of these issues are resolved, especially the U.S. debt crisis, analysts believe crude oil, and ultimately gas prices, will gain some clarity. However, a default would likely mean higher crude prices as the dollar weakens against foreign currencies.”
Tropical Storm Don made landfall along the Texas coast Saturday, causing a shut down of 300,000 barrels a day or 6.8 percent of oil production from the Gulf of Mexico, home to 31 percent of the U.S. oil output. Such an interruption in oil production, albeit relatively small and not prolonged, will likely lead to a bump in oil prices in the short-term.
Gas prices back on the rise
Temperatures weren’t the only thing on the rise throughout the Mid-Atlantic region this week. After dipping down to a low of $3.54/gallon on June 30 (following an early-May peak of $3.98/gallon), gas prices continued their upward climb for the third straight week. The national average for regular grade gasoline rose to $3.70 Friday, up 3 cents from last week, up 7 cents from a month ago and 98 cents higher than prices a year ago. Despite recent gains, gas prices remain 41 cents below the all-time record high of $4.11/gallon set in July 2008.
Crude oil crossed the $100/barrel threshold during trading on Thursday before settling slightly below the triple-digit mark, an impressive comeback after the commodity tumbled more than 20 percent between the end of April and the end of June on the heels of disappointing global economic news. At its highest level in about a month, crude oil has responded positively to positive developments in the Greek debt crisis and movement in the debate over extending the U.S. debt ceiling by the August 2 deadline. In addition to a weak U.S. dollar, crude oil was also supported by some signs that U.S. economic recovery has begun showing signs of strength, with jobless claims in line with expectations and the Federal Reserve Bank of Philadelphia’s economic index for July rose to 3.2 – above the forecast from economists and marking an impressive rebound from a negative reading last month. Crude oil closed the week at $99.87 Friday, a six-week high.
In its weekly report, the U.S. Energy Information Administration (EIA) data showed crude stocks dropped 3.7 million barrels to 351.7 million barrels. Gasoline stocks rose 800,000 barrels to 212.5 million barrels. Gasoline demand for the past week was flat, up 12,000 barrels per day (bpd) t 9.028 million bpd. The four-week average for gasoline demand remained 2.2 percent behind the same time last year.
“Motorists filling up their tanks this week were faced with a double whammy – excessive heat and rising gas prices,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “As temperatures reached triple-digits in many areas, gas prices rose for the third straight week, a one-two punch as the summer driving season moves into its second half. Analysts continue to believe gas prices will remain below $4 per gallon in the near-term, barring any unforeseen natural or economic event, ranging from $3.50 to $3.75 over the next month.”
Oil prices may gain some clarity over the next few weeks as a number of issues start to be resolved. One of the first is the Greek debt crisis (a settlement was tentatively reach last week and proved to advance crude oil prices briefly above the $100/barrel mark.) The larger European sovereign debt issue remains, as well as resolution of the U.S. debt crisis, both of which will impact currency values and hence the price of oil. Also China used less crude oil in June than anytime in the past nine months but why this happened is the subject of some debate that may be clarified soon. China’s government has been raising interest rates to curb inflation and some argue this will lessen oil demand. Whether or not crude oil remains in its recent $90 to $100/barrel range remains to be seen, but some analysts believe only two things can knock the commodity out of this range – a hurricane headed to the U.S. Gulf Coast or August 2 comes and there’s no agreement on the U.S. debt ceiling.
Gas prices continue recent climb
Motorists had to dig a little deeper this week to fill up their tanks as gas prices rose for the second consecutive week, despite dropping more than 20 cents in the past eight weeks to the most recent low of $3.54 on June 30. The national average for regular grade gasoline rose to $3.67 Friday, up 8 cents from last week, yet 31 cents below their May 5 peak of $3.98/gallon. Three years ago this week gas prices reached an all-time record high of $4.11/gallon.
Economic worries hurt crude oil late-week following week-long volatility due to concerns about the U.S. deficit and Europe’s debt. After trading at over $98 a barrel mid-week on positive U.S. jobs and retail sales data, the commodity fell $2 Thursday following a warning from Moody’s Investors Service that it might strip the U.S. of its gold-plated credit rating if the $14.3 trillion limit on the country’s borrowing was not raised. S&P followed suite with a warning that it could cut the U.S.’s prized triple-A rating within the next 90 days if a deal is not struck. In addition to U.S. economic concerns, lingering worries about the euro zone’s debt crisis continued to keep investors cautious. Also this week, the Federal Reserve hinted more stimulus might be coming if the economy continues to weaken. Despite late-week losses, crude oil rose on Friday to close at $97.24, retaining a big portion of gains recouped after prices fell to four-month lows following the June 23 announcement from the International Energy Agency of a coordinate move to release 60 million barrels from members’ emergency reserves.
In its weekly report, the U.S. Energy Information Administration (EIA) data showed crude stocks dropped 3.1 million barrels to 355.5 million barrels. Gasoline stocks dropped 840,000 barrels to 211.7 million barrels. Gasoline demand fell 293,000 barrels per day (bpd) to 9.016 million (bpd), 140,000 bpd behind the same week last year.
“As the summer driving season approaches the mid-way point, motorists find themselves digging a little deeper when filling up at the pump as gas prices rose for the second straight week,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “Yet prices remain 30 cents below the early-May peak and analysts caution (barring any unforeseen financial crisis or natural disaster) we are not headed to $4.00 per gallon gas prices this summer, but rather prices should remain below $3.75 per gallon through July and August.”
The EIA sees a deepening European debt crisis and slowing economic growth in China prompting reductions in forecasts for growth in global oil consumption. The top U.S. energy forecasting agency says it sees demand growing less than previously forecast this year and in 2012 due to a more moderate economic recovery and higher fuel prices. In its new monthly outlook, the EIA cut its forecast for 2011 world oil demand growth by 270,000 bpd to a 1.43 million bpd increase this year. Oil demand in 2012 will rise 1.58 million bpd, about 10,000 bpd lower than it forecast last month. OPEC also said world oil demand would grow more slowly in 2012 because of a fragile global economy and increased decline in consumption in Europe. The EIA expects regular-grade gasoline prices will average $3.62 per gallon and $3.51 per gallon over the third and fourth quarters of 2011.
AAA: Gas prices impact July 4th travel
Gas prices are predicted to deter some Virginians from traveling this July 4th holiday weekend with close to 1.1 million expected to celebrate Independence Day with a trip of 50 miles or more from home, a decrease of 2.4 percent (or just about 27,500 less) over last year’s holiday.
“The 2010 numbers represented a robust increase in the number of Virginian’s traveling for Fourth of July. This year’s holiday forecast remains strong despite the impact of sustained high gas prices,” said Martha Mitchell Meade, manager of public and government affairs for AAA Mid-Atlantic. “With current pump prices nearly one dollar more this year compared to last, fewer Virginians will be hitting the roads this year.
AAA continues to see strong resiliency among the traveling public as they head out year after year in mass to spend time enjoying holidays. However, “for the second holiday in a row, we are seeing a change in who is traveling with fewer traveling by car and many more traveling by air due to the impact of the recession and gas prices on those in the lower income brackets,” said Meade.
Automobile travel is expected to be down by 3.5 percent (943,000 forecasted auto travelers in Virginia), while air travel will rise by a whopping 21.5 percent or by nearly 15,400 people in spite of the fact that air fares are expected to be up about 11 percent over last year. Total airline passengers in Virginia are expected to reach close to 87,200.
“Although gas prices are impacting the average travel distance, median spending will actually be up this year due to the changing profile of the holiday traveler,” Meade said. “The average distance traveled by Americans during the Independence Day holiday weekend is expected to be 573 miles, 7 percent less than last year, yet median spending is expected to be $807, an increase of 25 percent from $644 last year.”
Gas prices continue downward trend
Gas prices continued their decline for the fourth consecutive week, dropping below the $3.70 mark as the summer driving season motors on.
The national average price of regular grade gasoline was $3.68 a gallon on Friday, down 4 cents from last week and down 25 cents in the last month, yet prices remain 97 cents higher than year ago prices and 43 cents below the all time high of $4.11 a gallon set nearly three years ago. The trigger for declining gas prices – crude oil – was also on the decline this week. The escalating Greek debt crisis, coupled with shrinking U.S. factory activity in the mid-Atlantic region (shrinking 7.7 percent to its lowest in two years, contrary to forecasts for a 6.8 percent rise) and strength in the dollar, sent crude oil prices downward for most of the week.
The commodity traded to an intra-day low of $91.12 Thursday before inching up to settle at $94.95. Analysts believe Greece will weigh into oil prices in the weeks ahead, contributing to the overall downward trend expected given recent negative economic data, both nationally and internationally. Crude oil settled at $93.01 Friday, down nearly 7 percent this week in the biggest fall since May. In its weekly report, the U.S. Energy Information Administration (EIA) data showed crude stocks fell 3.4 million barrels to 365.6 million barrels, a larger than expected drop.
Gasoline stocks rose 600,000 barrels to 215.1 million barrels. The latest EIA report also showed solid demand for gasoline. Last week’s gasoline demand numbers advanced 207,000 barrels per day (bpd) from the previous week to 9.37 million bpd. The four-week average is 0.5 percent above the same period in 2010, and the year-to-date tally is only 0.3 percent behind last year, even though prices have been about $1.00 per gallon higher.
“Prices at the pump rarely decline as rapidly as they increase, however, gas prices have steadily declined over the past four weeks just in time for the summer driving season,” said Martha M. Meade, manager of public and government affairs for AAA Mid-Atlantic. “Since peaking just shy of the $4.00 mark in early May, gas prices have dropped 30 cents per gallon. With the July Fourth holiday weekend just two weeks away, recent gas price declines are welcome news for motorists planning to take to the road.”
The International Energy Agency (IEA) notes in its mid-term report that higher demand and reduced spare OPEC capacity will leave oil markets under greater strain between now and 2012 than previously thought. It raised its five-year global oil demand forecast by an average of 700,000 bpd compared with the previous medium term report issued in December.
Gas prices stabilizing
Recent gas price declines, following near record-setting highs last month, were welcome news for motorists looking to kick off the official start of the summer driving season last weekend. While slight declines continued this week, gas prices stabilized in most areas in response to continued volatility in the crude oil market.
“Gas prices continue to be influenced by the crude oil market, as seen this week when prices at the pump stabilized somewhat following crude oil’s rise earlier in the week,” said Martha M. Meade, manager of public and government affairs for AAA Mid-Atlantic. “Yet despite recent volatility, analysts believe gas prices will continue to drop to within the $3.50 to $3.60 per gallon range by month’s end.”
The national average price of regular grade gasoline was $3.79 a gallon on Friday, down 2 cents from last week and down 19 cents in the last month, yet prices remain $1.07 higher than year ago prices. Although gasoline prices have dropped 19 cents since hitting this year’s high water mark of $3.98 a month ago on May 4th, the retail cost of gasoline, to the discomfiture of motorists, still remain at price levels not seen since July 2008.
In a shortened trading week, a weak U.S. dollar sent crude oil prices to a three-week high on Tuesday, above $103 per barrel. However, the release of disappointing economic reports mid-week – slumping housing, manufacturing and jobs data – sent crude oil down below the $100 mark. A downturn in economic growth could ultimately lead to a reduction in consumer spending, leading to lower fuel use.
On the international front, the fall in oil prices was tempered by continued unrest in the Middle East, with fighting in Yemen intensifying. Although Yemen is a small oil producer, it neighbors top oil exporter Saudi Arabia. Despite losses early in the day, crude oil closed at $100.22 Friday.
In its weekly report, the U.S. Energy Information Administration (EIA) data showed crude stocks rose 2.9 million barrels to 373.8 million barrels, well ahead of where they were at this time last year. Gasoline stocks rose 2.6 million barrels to 212.3 million barrels. The EIA also reported demand for gasoline was up 300,000 barrels to 9.431 million barrels per day (bpd).
