Gas prices for February have picked up right where they left off last month. In January, crude oil traded at record-high levels for the beginning of the year, translating to the highest gas prices ever for the month.
Gas prices averaged $3.37 per gallon nationally for the month of January, 27-cents higher per gallon than January 2011. The national average for regular grade gasoline climbed 8 this week to $3.47 per gallon Friday.
Prices are 18 cents above month ago prices and 35 cents above year ago prices, yet remain 64 cents below the all-time record high of $4.11 set three and a half years ago.
U.S. crude oil futures closed lower on Thursday, settling at a six-week low below $97 per barrel, extending losses for a fifth straight day (the longest losing streak since August 2011). Prices were mostly impacted on demand concerns after U.S. oil stockpiles increased more than expected last week, even as the dollar continued to fluctuate against other major currencies.
In addition to higher stockpiles, U.S. crude was impacted by data showing a slower pace of job creation in the private sector, although manufacturing growth picked up in January. In the Middle East, while the U.S. and several other countries have embargoed Iranian oil, senior U.N. nuclear inspectors plan another trip to Iran later this month after holding what both sides described as good talks on the Islamic state’s disputed atomic program.
Crude oil settled in positive territory at $97.84 per barrel Friday for the only time this week, due in part to an optimistic U.S. jobs report, yet reports that Iran threatened retaliation against the West for sanctions also had the market on edge a day after reports the U.S. defense secretary said Israel would likely bomb Iran to stop nuclear armament.
In its weekly report, the Energy Information Administration showed the nation’s crude oil stocks rose by 4.2 million barrels to 338.9 million barrels, a high last seen in October 2011. Gasoline stocks rose 3 million barrels, to 230.1 million barrels. Total petroleum demand fell to 17.65 million barrels per day (bpd), 6 percent below a year ago and a low not seen since mid-May 1999. Gasoline demand plunged to just 7.967 million bpd, the lowest weekly number since January 26, 2001 and the second time gasoline demand has dropped below 8 million bpd this year and the second time gasoline demand has dropped below 8 million bpd this year.
“Typically prices at the pump bottom out during the cold winter months only to rebound as spring approaches, however, this year has been anything but typical with gas prices reaching record-high levels for the month of January,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “What we can expect over the next few months remains to be seen. Although many analysts believe we could see record-setting gas prices by spring, this will likely depend on developments that arise in the Middle East and throughout international financial markets, impacting crude oil. Unseasonably mild winter weather would lead some to expect crude oil (and in turn gas prices) would decline, yet we’re seeing upwards of a 10-cent increase in gas prices this week, leaving motorists with more questions than answers.”
Record high gas prices for January have many motorists wondering what’s in store for the rest of the year.
Most analysts agree gas prices will reach record high prices during the first half of the year, yet lower demand and increased crude inventories do not support an upward trend, nor does the mild winter weather that has blanketed the Northeast so far this season. Although there are volatile factors, such as global economic conditions and unrest in the Middle East that could weigh heavily on crude oil and gas prices in the months ahead.
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