Refinery updates pushing gas prices upward

After falling for a record 123 consecutive days, for a total savings of $1.31 per gallon, gas prices have changed direction.  The national average price for regular unleaded gasoline ticked upward to $2.05 per gallon Friday, up a penny from the previous week, yet prices remain 22 cents less than one month ago and $1.23 less than one year ago.

This downward trend reversal has been largely reflective of a number of Midwestern states where prices have moved higher over the past week due to a series of refinery issues in the region.

The falling prices at the pump are a product of global oil prices tumbling to multi-year lows.  West Texas Intermediate (WTI) crude has settled in the mid-$40 per barrel range, down from a 2014 high of $107 last June.  The death of Saudi Arabia’s King Abdullah caused the global oil markets to slightly rally this past week on rumors that OPEC’s largest producer could possibly reassess its production levels and potentially decrease the current glut in global oil supply.

King Abdullah’s successor, Crown Prince Salman, calmed the market by deciding to keep the current oil minister in his position and signaling no plans to change the country’s current production plans.  By sustaining its current production levels, the resiliency of high-cost production countries like the U.S. and Canada will continue to be tested as the market is left to self-regulate at price levels that have not been seen in more than half a decade.  At the close of formal trading on Friday, crude oil settled at $48.24 per barrel, up nearly six percent on the week.

The Energy Information Administration (EIA) noted in its weekly report that crude oil inventories jumped 8.9 million barrels to 406.7 million barrels, a modern era record, shattering the weekly highs which date back to 1982.  Gasoline stocks dropped by 2.6 million barrels to 238.3 million barrels, though still considered “heavy” and at record high levels for the same corresponding week.  Last week’s gasoline demand came in at 9.022 million barrels per day (bpd), the highest for the same January week since 2007.

“After falling for 123 consecutive days, the national average for regular gasoline reversed course slightly last week,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic.  “Retail prices have caught up to the steep declines in the price of oil, which have stabilized in the mid $40 per barrel range.  As a result, we’ve likely hit a period of flat, or slightly higher gas prices for the near future.”

The 123-day slide in prices at the pump was a product of global oil prices tumbling to multi-year lows. While gas prices are likely to increase this spring due to seasonal demand and maintenance, barring any major increase in the global price of crude, AAA expects the national average to remain below $3 per gallon during 2015.

 

CURRENT AND PAST GAS PRICE AVERAGES

Regular Unleaded Gasoline (*indicates record high)

 

	2/1/15	Week Ago 1/25/15	Year Ago 2/1/14
National	$2.06	$2.04	$3.28
Virginia	$1.95	$1.96	$3.16
Charlottesville	$1.95	$1.96	$3.15
Norfolk Area	$2.00	$2.00	$3.19
Richmond	$1.88	$1.90	$3.10
Roanoke	$1.92	$1.93	$3.11
Crude Oil	$48.24 per barrel (at Friday’s close, 1/30/15)	$45.59 per barrel (Friday 1/25/15 close)	$98.23 per barrel (1/30/14)