March gas prices came in like a lion, trending upward before breaking a 40-day upswing, and look to be heading out the same way, as crude oil prices surge above $50 per barrel this week after dropping to six-year lows last week.
The downward pressure had, at least temporarily, offset potential price gains from regional refinery maintenance and the seasonal transition to more expensive summer-blend gasoline. The national average price of regular unleaded gasoline was $2.43 Friday, unchanged on the week, yet six cents higher than month ago prices. Friday’s average remained $1.11 below year ago prices. While the national average had fallen for 14 of the past 20 days, a slight uptick in gas prices has occurred over the last three days.
Global crude prices began the week at six-year lows with reports of growing supply and the strengthening U.S. dollar. However, geopolitics are once again fueling the oil market as Saudi Arabia looks to get involved in the unsettled politics in Yemen, where Iran and others are already involved. Iran and Saudi Arabia are two of the region’s most important oil producers. The domestic oil market in the U.S. is facing similar oversupply dynamics and concerns that rising U.S. production could outpace storage capacity contributed to lower prices. One week ago, WTI crude fell to its lowest level since the 2009 Great Recession, yet rebounded above $50 per barrel by mid-week. At the close of Friday’s formal trading on the NYMEX, crude oil dropped below the $50 per barrel to settle at $48.87 per barrel, still up nearly seven percent on the week.
The Energy Information Administration (EIA) noted in its weekly report that crude oil inventories continue to exceed its modern-day records. Crude oil inventories jumped 8.2 million barrels to 466.7 million barrels, an upward trend that is expected to continue into mid-May. Gasoline stocks dropped 1.1 million barrels to 233.4 million barrels. The huge gasoline demand figure in the previous report appears to have been a one-week trend as implied demand dropped by about 650,000 barrels per day (bpd) to 8.619 million bpd, a number that is more in line for this time of year.
“Recent declines in crude oil have offset refinery maintenance and the transition to summer-blend gas,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “However, crude oil has reversed its downward trend, and gas prices appear to be following suit.”
Although gas prices began to level off in the last week or so, pump prices are likely to continue their upward direction started a few days ago, as crude oil prices rebounded from six-year lows to climb above $50 per barrel. Crude oil makes up more than two-thirds of the cost of a gallon of gasoline, therefore when crude prices rise, gas prices typically rise as well.
CURRENT AND PAST GAS PRICE AVERAGES
Regular Unleaded Gasoline (*indicates record high)
| 3/29/15 | Week Ago
3/22/15 |
Year Ago
3/29/14 |
|
| National | $2.42 | $2.42 | $3.54 |
| Virginia | $2.22 | $2.24 | $3.36 |
| Charlottesville | $2.23 | $2.24 | $3.29 |
| Norfolk Area | $2.21 | $2.25 | $3.39 |
| Richmond | $2.24 | $2.21 | $3.34 |
| Roanoke | $2.20 | $2.20 | $3.28 |
| Crude Oil | $48.87
per barrel (Friday 3/27/2015 close) |
$45.72
per barrel (Friday 3/20/15 close) |
$101.28
per barrel (3/27/14) |
Support AFP
Share
Chris Graham
