Gas prices began the month of March at $3.77 per gallon, just two cents below the mid-winter peak price of $3.79 just two days prior (February 27). Over the past four weeks, the national gas price average dropped 13 cents to $3.64 Friday. This price is five cents below the week-ago price, 15 cents below the month-ago price and 28 cents less expensive than the year-ago price. Since March 1, the national average has fallen 23 of 29 days, dropping 13 cents (from $3.77 on March 1).
Crude oil strengthened to a five-week high on Wednesday (settling at $96.58 per barrel), supported by a larger-than-expected build in crude oil inventories (3.3 million barrels) and signs of increased demand. Economic news, both domestic and international, also supported crude oil’s run above the $96 per barrel mark. The U.S. economy in the fourth quarter was better than expected, with the government’s final analysis showing a 0.4% growth. Cyprus banks also reopened, which could help to mitigate fears of unrest spreading through the Eurozone, although analysts caution it is too soon to forget the debt crisis in Europe. At Thursday’s close, crude oil settled at $97.23, up 3.8 percent on the week. The NYSE is closed on Friday, March 29 in observance of Good Friday.
In its weekly report, the Energy Information Administration (EIA) data showed crude oil stocks saw a larger-than-expected 3.3 million barrel build last week to 385.9 million barrels (inventories have risen 10 out of the last 11 weeks). Gasoline stocks fell 1.6 million barrels, below expectations, to 221.2 million barrels. Domestic production remains steady at just over 7.1 million barrels per day (bpd). On a weekly basis, gasoline demand rose by 75,000 bpd, but the 8.399-million-bpd demand figure is 311,000 bpd below same week last year. More significantly, the four-week moving average is now negative to the same period a year ago. January and February saw a trend of higher 2013 demand which has apparently run into a road block in March.
“While prices at the pump have declined throughout most of March, it is still too soon to say whether retail prices have peaked for the spring because there is still refinery maintenance to be completed and much of the country has yet to transition to (more expensive) summer-blend gasoline,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “However, with the national average falling further below the year-ago price, AAA continues to predict that the national average will crest lower than recent years. In 2011 the national average for regular unleaded peaked at $3.98 on May 5. In 2012 the price peaked at $3.94 on April 5 and 6.”
The 2013 gas prices peak (so far) came on February 27 when prices reached $3.79 per gallon. In 2012, gas prices peaked at $3.94 on April 5 and 6. It is too soon to tell whether or not prices will peak again this spring, especially since many parts of the country have yet to switch over to summer blended gasoline which generally takes place before May 1. Various factors, both domestic and international, will influence financial markets, crude oil prices, and ultimately gas prices in the coming months.
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Chris Graham
