Gas prices inch upward for second straight week

Earlier this month gas prices were falling at about 1-cent per day and were expected to continue their decline through the autumn and early winter months.  However, over the past two weeks prices at the pump have shifted gears, rising at the rate of about 1-cent per day or even more in some areas.  In the last week, the national average for regular grade gasoline rose 3 cents to $3.47 Friday, yet prices are 10 cents below month ago prices.  Prices remain 64 cents higher than year ago prices, yet 64 cents below the all-time high of $4.11 per gallon set in July 2008.

Crude oil continued to trade in the $80 to $90 range throughout the week, inching upward early on in the week, then pulling back Wednesday and Thursday.  Affecting the commodity this week – France and Germany have assured the markets that European leaders will present a comprehensive solution to the euro zone debt crisis at a summit this weekend and next week.  Also, U.S. economic data remains weak (indicating less demand for fuel), however, the Federal Reserve showed a slight increase in consumer spending in September.  Lastly, the demise of former Libyan leader Moammar Gadhafi will speed up Libya’s oil industry, which has already ramped up to 430,000 barrels per day after being off line for most of the spring and summer months.  Analysts believe crude oil will continue to be range bound between $85 to $90 range in the short term, barring any significant national or international news event that would move the needle in either direction.  Crude closed the week at $87.40.

The U.S. Energy Information Administration’s (EIA) weekly report showed crude stocks fell sharply by 4.7 million barrels, to 332.9 million barrels.  Gasoline stocks dropped 3.3 million barrels to 206.3 million barrels.  Gasoline demand over the past four weeks was 8.598 million barrels, the lowest level since early February and 1.5 percent behind the same time last year.

“For the second straight week, motorists continue to feel price hikes at the pumps,” said Windy VanCuren, Public Affairs Specialist for AAA Mid-Atlantic.  “Economic fears, nationally and internationally, have fueled the recent rise in crude oil prices, which ultimately leads to gas price increases.  Gas prices could buck typical downward seasonal trends with an autumn and early winter upswing, rather than previously forecast declines.”

Motorists will likely continue to feel the pinch at the pump in the week ahead, barring any unforeseen circumstance that would tumble crude oil prices or affect demand, as gas prices continue to inch upward.  As crude oil tests the $85 to $90 per barrel range, gas prices will likely break through the $3.50 per gallon mark in the coming week and potentially beyond.