Following last year’s volatility, 2013 has started with relative price stability at the pump. The national average price for a gallon of regular unleaded gas rose 4 cents over last week to $3.33 Friday, 8 cents more than last month and 5 cents less than one year ago.
In the first 25 days of the year, the national average has yet to record a daily price change of a penny or more per gallon. By comparison, daily prices in December changed by at least that much 15 times. Last January, the daily average moved by a penny or more nine times, including two increases of more than three cents per gallon, which were two of the six largest daily price changes of the year. The largest one-day change in the national average in 2012 was on August 29 when prices surged by nearly five cents per gallon the day after Hurricane Isaac made landfall on the Gulf Coast.
Crude oil continued to trade above the $95 dollar mark throughout the week, despite settling down on Wednesday, snapping four straight sessions of gains. The loss was due to pipeline reduction issues at the Seaway pipeline between Oklahoma and Texas, raising concerns about U.S. crude inventories. However, news that the pipeline would be restored reversed the commodity’s one-day downward trend Thursday. Crude oil’s rebound Thursday was also supported by strong economic data from China, the eurozone and the U.S. Jobless claims in the U.S fell to their lowest level in five years (January 2008) and manufacturing had its strongest showing since March 2011, both indicators that fuel demand could be on the rise. Crude oil closed the week at $95.88, up less than half a percent on the week.
In its weekly report, the U.S. Energy Information Administration (EIA) data showed a 2.8 million barrel increase in crude oil stocks, to 363.1 million barrels, well above the upper limit of five-year range for this time of year. Gasoline stocks fell by 1.7 million barrels to 233.3 million barrels, also well above the upper limit of the five-year average range. Gasoline demand was not as poor as expected. The EIA showed a 111,000 barrel per day (bpd) increase in demand last week to 8.431 million bpd. The total four-week average gasoline demand figures showed an average 8.3 million barrels a day, a rise of 1.4 percent compared with the same period a year ago.
“Slow, steady increases in crude oil prices over the last two weeks have caused gas prices to inch up a few pennies throughout the region, though AAA continues to believe that the national average price of gasoline in 2013 will be lower than the record average in 2012 ($3.60/gallon),” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “Prices at the pump should remain relatively stable through the remaining weeks of winter ahead of seasonal spring increases in March and April.”
AAA continues to expect that the national average price in 2013 will be less expensive than the record average in 2012 ($3.60/gallon), and analysts continue to predict that demand destruction is likely to persist even with a recovering economy. Prices at the pump are expected to remain stable ahead of seasonal spring increases due to the changeover to more-expensive summer blended gasoline. As spring approaches, AAA expects fuel prices to climb through April or early May, peaking in late-spring in the mid to high-$3.00 range. This should enable prices to drop during the first half of the summer to the low to mid-$3.00 range.
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