AAA – Current Gasoline Prices Continue to Stabilize

Current gasoline prices in the Northeast keep on stabilizing after an atypical autumn increase over the past two weeks.

The average gasoline price throughout the country has been at a record high for over seven consecutive weeks. Last week, the nationwide gasoline price average for regular gas was $3.81 a gallon, a rate that is higher by 2 cents and 5 cents compared to last week and last month, respectively.

Gasoline prices stay higher by 40 cents and lower by 30 cents compared to last year and the record high rate posted in July 2008, respectively . California’s historic gasoline price spike caused a skewing of these national averages. The average of the state has gained a record high of 50 cents in the past week, pushing it to $4.67 a gallon, an all-time high.

The crude oil price per barrel started the week lower than $90 because of worries about weak energy demand in the midst of the economy’s slow growth. In the middle parts of the week, however, the commodity has turned over its latest decline.

Concerns regarding the possible risk of supply disruptions from the Middle East and delays in the loading of North Sea crude pushed crude oil prices higher. U.S. benchmark crude recently rose closer to $93 per barrel, its highest level in many weeks, due to rising tensions between Syria and Turkey. Even if the two nations are not primary crude producers, experts are concerned that tensions may spread to the region’s larger producers.

Unemployment benefits in the United States fell to their lowest rate in four years, partially supporting rising oil prices. The recent settlement of crude oil was $91.86 per barrel for its first week-long gain within a one-month period.

The weekly report of the U.S. Energy Information Administration showed that crude oil supplies recently increased by 1.67 million barrels versus the projected inventory gain of 800,000 barrels. Meanwhile, gasoline inventories in the United States shed 534,000 barrels against forecasts that they will stay the same during the week. U.S. demand keeps on dropping, with gasoline consumption down by 3.3 percent during the four weeks to the 5th of October, compared to the past year.

Even if relief has been coming slow, current gasoline prices are anticipated to further drop for the rest of the year; there is even positive news for prices next year. The U.S. EIA is projecting gasoline’s national average to fall in the coming year compared to its level in the past two years. According to gasoline price analysts, while the expectations for the remainder of 2012 mean lower pump prices, there are too many variables to be sure whether or not prices will truly fall in the coming year, particularly geopolitical tensions in North Africa and the Middle East.

In the short run, lower gasoline demand in the winter and the latest shift by refineries in the United States to producing less costly winter-blend gas may cause the prices at the pump to fall down in the winter.

By: Chris Termeer

Chris Termeer

Chris Termeer is an oil and gas consultant, industry commentator and analyst. His book, Fundamentals of Investing in Oil and Gas provides a comprehensive overview of all aspects of the oil and gas industry, including exploration, drilling, production, storage, transportation and refining, to name but a few.

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