Staff Report
After weeks of steady increases, gasoline prices began to retreat slightly this week. The average U.S. retail price for regular gasoline dropped to $2.68 a gallon on Friday, down two cents over the week and 34 cents above year-ago prices.
Despite recent increases, gasoline prices are still $1.43 below the record price of $4.11 set last July.
Crude began the week at $77 a barrel and rallied through mid-week to above $81 a barrel, before retreating at week’s end to settle at $77.43 at Friday’s close, a 43-cent gain on the week. Crude’s mid-week rally was a result of a decline in U.S. crude oil inventories, a weakening dollar and slight demand increases.
However, Labor Department data released Friday showing an unexpected jump in the U.S. unemployment rate to 10.2 percent in October (exceeding forecasts of 9.9 percent), the first time in over 26 years the figure has seen double digits, sent crude oil down more than 3 percent. The higher-than-expected jobless rate led investors to question the pace of economic recovery and petroleum demand, causing a movement away from oil and into safer investments.
The Energy Information Administration’s weekly report showed crude stocks fell 4.0 million barrels to 335.0 million barrels, against a forecast for a 1.4 million barrel build and greater than the 3.3 million barrel drawdown reported by the American Petroleum Institute.
Gasoline supplies fell 300,000 barrels to 208.3 million barrels, opposite the forecast for a 300,000 barrel increase and lower than the 500,000 barrel build reported by the API. The EIA also reported gasoline demand increased 157,000 barrels per day (bpd) nationally, but the current four-week average is flat to the same period in 2008
“The recent pinch at the pump has motorists wondering if gas prices will continue to rise and if so by how much,” said Martha M. Meade, manager of public and government affairs for AAA Mid-Atlantic. “Crude oil has been the driving factor behind gas prices increases. Should crude oil level off in light of recent economic news, prices at the pump should begin to stabilize and eventually decline.”
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Chris Graham
