AAA: Gas prices hold steady, expected to drop through June
Gas prices have remained steady throughout the Mid-Atlantic region since the Memorial Day holiday weekend, even showing some slight declines in some areas. The national average price for regular unleaded gasoline saw a two-cent increase this week to $3.63 Friday. This price is nine cents higher than one month ago and seven cents higher than the same date last year. The nationwide average price of regular gasoline increased 10.4 cents per gallon in May, the first monthly increase since February. Yet despite recent increases, gasoline prices may have already reached their peak for the summer driving season, as well as for the year. To date, the highest national average gasoline price for 2013 was $3.79 a gallon on February 27. In would be unprecedented for gas prices to peak in February.
Crude oil prices rose gradually throughout the week, supported by positive economic data, both nationally and internationally. U.S. unemployment claims fell and the dollar weakened against other currencies, both signs that demand is expected to rebound albeit slightly, as the economy continues to recover. In Europe, the Bank of England kept its interest rate unchanged, a sign that economy should see gradual recovery later this year. Crude oil has posted its first weekly gain in a month this week, settling at $96.03 Friday.
In its weekly report, the Energy Information Administration (EIA) data showed crude oil stocks saw a larger than expected draw, dropping 6.3 million barrels to 391.3 million barrels, likely due to the run up in refinery operations. Gasoline stockpiles fell slightly last week, dropping 360,000 barrels to 218.8 million barrels. EIA data also showed that after two weeks of relatively strong gasoline demand, demand figures took a small step back last week to 8.822 million barrels per day (bpd). Though 135,000 bpd lighter than the previous week, last week’s tally is the second highest of 2013.
“While gas prices may tick higher in the next few days, AAA continues to expect lower prices as June continues,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “Prices should drop below a national average of $3.50 per gallon by the end of the month if refineries can transition smoothly from ongoing maintenance to full production. That said, as the Atlantic hurricane season gets off to a quick start, any disruption in refining and production capacity in the Gulf of Mexico would undoubtedly affect prices at the pump.”
Experts believe gas prices will remain relatively calm over the next two months or so, with prices dropping in areas where sharp spikes have occurred and slight increases in areas where prices have seen slight decreases or been relatively stable. Tom Kloza, Chief Oil Analyst for the Oil Price Information Service (OPIS) and AAA gas price partner expects prices will average around $3.35 to $3.70 per gallon through the summer, though there will be some regional diversity. Of course, this is contingent on a lack of events that would influence crude oil prices and, in turn, gasoline prices – hurricanes, regional power outages, international events, financial news, etc.