In a seasonally rare move, gasoline prices have declined over the last week, falling two cents per gallon to $2.29, according to fuel price-tracker GasBuddy.com.
The rare move comes as oil prices break out of their well-established rut of trading between $51 to $54 per barrel, territory that prices have remained stuck between since OPEC’s November 30 decision to cut oil production. The sudden skid in oil prices last week developed after the Energy Information Administration’s Weekly Petroleum Status Report showed another large increase in crude oil inventories. While oil markets initially shrugged off the data, which set a new record high level for inventories, markets crashed later in the day after fully digesting the relatively bearish data.
“A sudden plunge in the price of oil is likely to weigh on gas prices, at least temporarily,” said Patrick DeHaan, senior petroleum analyst for GasBuddy.com. “With little warning or expectation, crude oil last week broke out of the rut it had well established, with crude prices falling out of a 3-month range of $51-$54 per barrel to $49. Fundamentals of oil have weakened, and with last week’s large 8.2 million barrel rise in crude oil inventories, the market has turned decidedly bearish for now. Naturally, when oil prices take a beating such as they did last week, one might expect gasoline prices to move in lockstep, but due the complex relationship of oil and gasoline prices and the middleman – U.S. refineries – motorists may not see as large a decline at the pump as they may hope for- but certainly stay tuned. I remain optimistic that the annual spring rally at the pump could be less severe than expected, but remain cautious as it remains difficult to know where the new path will lead oil prices in the week ahead,” DeHaan said.
While gasoline demand has rebounded slightly, overall petroleum demand has lagged for much of 2017, and while OPEC’s crude oil production cuts have been highly talked about, they have so far not reduced the surplus in U.S. commercial crude oil inventories, thanks to a rise in both U.S. and Canadian oil output.
The overall drop in oil prices last week was glaring: for the first since time November, crude oil prices traded under $50 per barrel, nearly a 10% week-on-week decline in price. The decline in oil is starting to show up at fuel pumps across the country, slowly but surely.
Just 16 states saw average gas prices rise versus last week, with Utah leading gainers with a rise of 8 cents. Following was Oregon (8 cents), Alaska (5 cents), Washington (5 cents) and Idaho (3 cents). Leading decliners was the Midwest: Indiana fell 12 cents, Kentucky and Ohio fell 9 cents, Michigan dropped 8 cents and Illinois fell 6 cents.
The overall gasoline price climate loosened in the last week with a shift towards lower prices. The number of stations selling gas under $2 per gallon rose from 7% a week ago to 9.4% this morning, while the number of stations selling over $2.25 fell from 47.7% to 42.4%.
States with the lowest and highest average gasoline prices this morning:
Low: South Carolina ($2.02), Tennessee ($2.05), Alabama ($2.05), Mississippi ($2.06), Oklahoma ($2.08)
High: Hawaii ($3.09), California ($3.01), Washington ($2.83), Alaska ($2.76), Oregon ($2.67)
With oil prices this morning continuing recent downward trajectory, motorists may be seeing more of a break at the pump in the week ahead. While the downward trend is certainly not set in concrete, it appears to be relatively strong and could lead oil to its sixth straight daily decline.