On the heels of the Labor Day weekend and the return to work and school, gasoline prices eased for motorists for the fourth consecutive week before slightly increasing Thursday. After decreasing earlier in the week, the average U.S. retail price for regular gasoline edged up a penny Thursday to $2.58 a gallon, and held there on Friday. The current price is $1.09 below year-ago prices and $1.53 below the record price of $4.11 set last July.
After dropping almost $5 a barrel last week, crude oil rebounded throughout the week climbing as high as $72.90 in intraday trading Friday, only to fall nearly 4% in late day trading to settle at $69.29. The U.S. dollar hit its lowest level in nearly a year against other major currencies this week, helping crude oil gain more than 5 percent on the week as commodities became more attractive to investors. However, Friday trading saw equities struggle, raising fear about economic recovery and in turn a recovery in energy demand. Oil hit a year-high of $75 a barrel in late August, from below $33 a barrel in December, as global oil demand recovered. At its meeting in Vienna this week, OPEC kept output levels unchanged as many analysts had expected
The latest Energy Information Administration report showed crude inventories fell 5.9 million barrels to 337.5 million barrels, far greater than expectations of a 1.5 million barrel drop. U.S. gasoline supplies unexpectedly rose 2.1 million barrels to 207.2 million barrels, compared to an expected 1.3 million barrel decline.
Also this week, the EIA slightly tweaked its 2009-2010 oil price outlook. The EIA cut its forecast for world oil demand growth in 2010 by 30,000 barrels per day (bpd) to daily demand of 84.58 million bpd. But it boosted its forecast of global oil production growth by 150,000 bpd to average output of 84.65 million bpd. Looking ahead to the fourth quarter, the EIA lowered its forecast for OPEC crude oil production to 29.26 million bpd from its prior estimate of 29.31 million bpd and it raised its forecast of OPEC oil output for 2010 to an average of 28.89 million bpd from 28.82 bpd. Its forecast for gasoline demand in 2010, given modest economic recovery, calls for growth of only 60,000 bpd compared to 2009 and retail gasoline is expected to average $2.70 a gallon next year, up from a previous forecast of $2.66.
“Labor Day has come and gone, which typically signals a drop in gas prices,” said Martha M. Meade, manager of public and government affairs for AAA Mid-Atlantic. “As motorists return to regular work and school routines, driving levels drop off and gasoline prices typically follow suit. AAA anticipates gas prices will hover at about $2.50 a gallon for the next few weeks.”
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Chris Graham
