The multi-month slide in gas prices continues as the official start of summer approaches, easing pain at the pump for motorists and summer travelers.
The national average price for regular grade gasoline dropped to $3.52 Friday – down 4 cents for the week, 21 cents for the month and 17 cents below year-ago prices. Prices are at their lowest level nationally since February 18th. Since their spring peak prices have dropped 42 cents nationally and continue to pull back from the all-time record high of $4.11 set in July 2008.
Crude oil prices continued to maintain within the $81 to $85 per barrel range this week, after having dropped more than 20 percent from their spring peak. Oil prices fluctuated by week’s end ahead of several upcoming events that could influence global supply and demand: the Organization of Petroleum Exporting Countries (OPEC) formally announced it was keeping its output ceiling of 30 million barrels a day in place; the Labor Department said the U.S. consumer price index fell in May for the first time in two years and that new jobless claims rose for five of the last six weeks; a Greek election Sunday could lead the country to abandon the euro, indicating the European financial crisis could worsen; ample availability of crude oil in the market; and early next week leaders from six global powers will try to convince Iran to abandon its nuclear ambitions when the two sides meet in Moscow. Crude oil settled at $84.03 Friday to close the week.
In its weekly report, the Energy Information Administration reported the nation’s crude oil stocks fell 191,000 barrels to 384.4 million barrels, still a comfortable U.S. inventory. Gasoline stocks fell 1.7 million barrels to 201.8 million barrels. Gasoline demand was a surprise, rising by 482,000 barrels per day (bpd) to 9.13-million bpd, the highest implied gasoline demand number since last August. One year ago, the EIA reported a 9.37-million bpd figure and that proved to be the high water mark for the rest of 2011. Total petroleum demand was also impressive. Petroleum deliveries hit 19.4 million bpd last week, up 1.18 million barrels from the previous week and 599,000 bpd ahead of last year. Not since November 4, 2011 has there been a higher weekly total demand figure and that week proved to be a mid-autumn quirk. One has to go back to the storied 2008 year to find similarly high demand for the second week of June.
“As the official start of summer approached this week, motorists, especially summer travelers, are wondering if recent relief at the gas pumps will continue throughout the season,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “The answer is most likely. Barring any unforeseen national or global economic disaster, some analysts have revised gas price forecasts for the remainder of the year given the recent downturn in prices, indicating prices will likely average $3.60 per gallon for the summer driving season (April to September), with prices potentially dropping to $3.00 or below in some regions of the country.”
The U.S. Energy Department’s Energy Information Administration (EIA) has revised its Short Term Energy Outlook to note it expects gas prices to average $3.60 per gallon for the April to September driving season, down from an anticipated $3.79 per gallon from its May Outlook, and average $3.51 per gallon in the third quarter, down from a $3.76 per gallon forecast in May. The EIA expects regular gasoline retail prices, which averaged $3.52 per gallon in 2011, to average $3.56 per gallon in 2012 and $3.51 per gallon in 2013. The agency also revised its crude oil price forecast for the balance of 2012 to below $100/bbl. At $95 per barrel, the updated prediction is almost $11 per barrel lower than that in last month’s edition of Outlook. Crude prices averaged more than $100 per barrel over the first four months of 2012, then fell from $106.16 per barrel to $83.23 per barrel between May 1 and June 1. The EIA noted crude oil prices account for about 70 percent of the price per gallon of gasoline in the United States and estimates U.S. crude oil production to average 6.3 million barrels per day in 2012, the highest level since 1997.
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