After weeks of steady increases, gasoline prices may have reached a springtime peak of $3.70 per gallon (April 28). The national average price of regular grade gasoline dropped two cents this week to $3.66 Friday, yet remains six cents more expensive than one month ago and 11 cents higher than a year ago. After widening to a year-over-year price gap of 20-cents per gallon - the largest difference since July 22, 2013 - the gap has closed each day for the past week and will likely continue to narrow in coming days. While prices this year are falling, prices at the same time in 2013 were increasing from a spring low. Today's price remains lower than the same date in both 2011 and 2012. In 2011, on this same calendar date, the national average peaked at $3.98 per gallon. In 2012 the peak was $3.78 per gallon on April 5 and 6.
Crude oil climbed above the $100 per barrel threshold on Wednesday, breaking a week-long streak of sub-$100 per barrel settlements. A strong decline in crude oil inventories, reported by the Energy Information Administration (EIA), supported the upward movement. Tensions between Russia and Ukraine remain front of mind, and the latest round of sanctions is sustaining the geopolitical "risk premium" that is factored into the market. Additionally, disappointing economic data from China and the expectation that delays in oil supplies from Libyan ports will persist, continue to influence the global market. Crude oil settled at $99.99 Friday, flat for the week.
In its weekly report, the Energy Information Administration noted that U.S. crude oil stocks dropped 1.8 million barrels to 397.6 million barrels, following a four straight weekly build that brought inventories just shy of 400 million barrels. Gasoline inventories grew 1.6 million barrels to 213.2 million barrels. Gasoline demand firmed up at 8.719 million barrels per day (bpd) and remains favorable versus this time last year.
"Springtime gas prices may have reached their peak ($3.70 per gallon) nationally last week, which is welcome news for motorists gearing up for the summer driving season," said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. "Prices at the pump typically rise in the spring as refineries make the changeover to more expensive summer blended gasoline, then typically retreat to begin the summer months. AAA anticipates prices at the pump will continue to retreat slightly as Memorial Day weekend approaches."
The Week Ahead
Though prices at the pump are higher than they were this time last year, for most of the year they have been less than 2013 levels. This is likely to be the case as Memorial Day approaches. Last year motorists paid $3.66 per gallon (Friday's gas price average) on Memorial Day. Looking ahead to summer, the EIA expects record-high U.S. crude inventories to keep a lid on summer gasoline prices and slash crude imports to the lowest level since 1970. EIA expects the average monthly gasoline price to reach $3.72/gal this month and then gradually decline by about 20-cents per gallon by September.