While consumers are still experiencing higher gas prices compared to last year due to the OPEC agreement, they are seeing prices drop slowly across the Mid-Atlantic region as a result of increased gasoline inventories and low demand across the country.
Despite the high prices, some Mid-Atlantic and Northeast states saw prices drop on the week, including Virginia (-3 cents).
“Oversupply is keeping gas prices low as the market awaits the summer driving season’s demand for fuel,” said Tammy Arnette, Senior Public Affairs Specialist for AAA Mid-Atlantic. “Oil prices remain under $50 per barrel, which also contributes to lower prices at the pump.”
Today’s national average price for a gallon of regular unleaded gasoline is $2.35, a four cent drop from one week ago, three cents less than last month and 13 cents more than this time last year. One year ago, the country was experiencing higher consumer demand and prices were increasing.
At the close of trading Friday, May 5, on the NYMEX, WTI crude oil dropped $3.11 to settle at $46.22. The sub-$50 per barrel price can be partly attributed to increasing crude oil stocks. Increased production from the U.S. comes ahead of talks to extend a production cut agreement from OPEC and non-OPEC countries, which is scheduled to end on June 30. The countries in the agreement will meet on May 25 in Vienna, Austria to discuss whether to end or extend the supply reduction.
There is reason to believe that continued low crude oil prices is reducing global investment in oil exploration, which could lead to tighter supplies moving forward. Last week, the International Energy Agency (IEA) released information that revealed global oil discoveries fell to a record low in 2016, as companies continued to cut spending and conventional oil projects were at their lowest level in 70 years.
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