Retail gas prices continue their upward movement. Strong demand for gasoline has continued into November and is chipping away at the national inventory of gasoline. For the week, the national average for regular unleaded adds two cents to $2.54 a gallon while the Oregon average jumps a nickel to $2.86. The latest report from the U.S. Energy Information Administration (EIA) reports total gasoline inventories dropped by 3.3 million bbl.
“Gas prices are showing double-digit increases compared to the first half of November last year. Both the national and Oregon averages are more than 30 cents a gallon higher than a year ago,” says Marie Dodds, public affairs director for AAA Oregon/Idaho. “However AAA still projects that gas prices will level off and then move lower as we get closer to the holidays.”
Oregon is one of 42 states and Washington D.C. where gas prices are higher week-over-week. Prices are less in eight states. The largest increases are in Alaska (+10) and Florida (+8 cents). Indiana has the largest weekly decrease of seven cents.
Oregon is one of 43 states and Washington D.C. where gas prices have risen in the last month. Prices have fallen in seven states. The largest monthly increases are in Illinois (+24 cents) and Delaware (+23 cents). The national average is eight cents more and the Oregon average is nine cents more than a month ago. The largest monthly decreases are in Utah (-11 cents) and Idaho (-6 cents).
The West Coast still has the most expensive gas prices in the nation with six of the top ten markets in this region. For the second week in a row, California has the most expensive gas followed by Hawaii, Alaska and Washington. These four states all have averages at or above $3 a gallon. Oregon is fifth most expensive for the 20th week in a row.
Refinery utilization on the West Coast remains high at 86.2 percent, according to the EIA weekly report. The report also showed that crude oil inputs through regional refineries also increased last week by 135,000 bbl to reach 2.388 million bbl per day.
The nation’s cheapest markets are Alabama ($2.27) and Mississippi ($2.28). For the 16th week in a row, no states have an average below $2.
Drivers are paying more than a year ago to fill up. The national average is 39 cents more and the Oregon average is 37 cents more than a year ago.
Oil Market Dynamics
Crude oil prices remain above $50 per barrel but are down slightly from 2015 highs reached two weeks ago. Oil prices fell slightly to open this week as the International Energy Agency EA cut its oil demand growth forecast. In addition, the oil services firm Baker Hughes reported that drillers added nine rigs last week, the biggest increase since June of this year, bringing the total crude oil rig count to 738.
The increased U.S. production continues to dilute OPEC’s efforts to rebalance the global oil market and may be on the minds of OPEC cartel members when they meet in Vienna on November 30 to discuss extending their production cuts through the end of 2018 to rebalance global crude oil supply.
At the same time, tensions in Saudi Arabia, Lebanon, Iran and Bahrain have traders keeping a watchful eye on the region. Discussions of political power and influence continue to surround the Saudi Arabian King and his son the Crown Prince. At this time the King has not relinquished the thrown to his son, but his son continues to instate economic reforms including a plan to sell off a portion of the government-owned Saudi Aramco oil company.
On Friday, an explosion at Bahrain’s main pipeline shut down operations. Bahrain officials have labeled the explosion an act of terrorism and linked it to Iran. Over the weekend, the country was able to get the fire under control and shut off oil supplies to the pipeline. At this time, it is unclear when Bahrain will have its pipeline back up and running. Monday also saw a powerful earthquake hit the border of Iraq and Iran, killing more than 400 people. Both countries currently have search and rescue missions responding to earthquake. In the coming days, government officials will know more about the extent of the damage and whether any energy producing sectors where damaged during the quake.
Traders will continue to keep an eye on any supply disruptions in the Middle East, U.S. production and the impact it has on global supply and demand. At the closing of Friday’s formal trading session on the NYMEX, WTI was down 43 cents to settle at $56.74 per barrel. At the close of Monday’s formal trading session, WTI added two cents to settle at $56.76 per barrel. Today crude is trading around $56, compared to $57 a week ago. Crude prices are up about seven percent in the last month and are about $13 more per barrel than a year ago.