Gas prices continue downward trend

Gas prices in Virginia continue to drop, at an average of $2.30 per gallon for regular unleaded, down five cents a gallon frmo a week ago.

“The low price of crude continues to deliver significant year-over-year savings at the pump,” said Martha Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic.  “Luckily, the Mid-Atlantic states did not fall victim to the refinery issues happening in the Midwest and should continue to see gas prices decline slightly for the last two weeks of the summer travel season.”

With only two weeks left until Labor Day, the demand for gasoline is strong and gasoline production is meeting that demand. According to the Energy Information Administration (EIA), the total gasoline production number last week was a record at 10.248 million barrels per day.

CURRENT AND PAST GAS PRICE AVERAGES

Regular Unleaded Gasoline (*indicates record high)

WTI closed out the week at $40.29 per barrel.   Market fundamentals continue to support the price of crude moving lower in the near term due to global oversupply. The market is now responding to reports that the Japanese economy is shrinking, which has been viewed as yet another signal that supply will likely outpace demand in the near term.

The EIA cut its price projection for U.S. benchmark West Texas crude by $6 per barrel for 2015 and $8 per barrel for 2016 from its prior prediction. The EIA now anticipates that WTI crude will average $49 per barrel in 2015 and $54 per barrel in 2016. The more moderate forecasts come from concerns over economic growth in emerging markets, continuing supply growth, increases in global liquids inventories and the possibility of increasing volumes of Iranian crude oil penetrating global markets.

The EIA does say, though, that supply growth is slowing down, but that didn’t prevent it from reducing the numbers.