March 19, 2015
Drivers were sorry to see $2-a-gallon gasoline prices disappear in January, but those prices will probably be back for an encore later this year.
After all, U.S. government data show crude-oil inventories at a record high of 458.5 million barrels, crude prices have fallen more than 14% year to date, and a recent strike among refinery workers ended in early March.
March 19, 2015
Drivers were sorry to see $2-a-gallon gasoline prices disappear in January, but those prices will probably be back for an encore later this year.
After all, U.S. government data show crude-oil inventories at a record high of 458.5 million barrels, crude prices have fallen more than 14% year to date, and a recent strike among refinery workers ended in early March.
“That crude oil needs to be turned into something — and that will be refined products,” said Denton Cinquegrana, chief oil analyst at the Oil Price Information Service. “Right now, refining margins are ample enough to motivate refiners to run. Those that are running right now are going to be able to take advantage.”
The Energy Department reported a fall of 4.5 million barrels in gasoline supplies for the week ended March 13, but that drop is “probably going to be the exception and not the rule in the coming weeks, as refineries return from planned winter maintenance,” said Cinquegrana.
Meanwhile, the roughly month long refinery-worker strike had little effect nationally, though it did boost gas prices in California, according to Brian Milne, energy editor and product manager at Schneider Electric.
Nationally, gasoline supplies reached a 25-year high on Feb. 13, he said, citing EIA figures. Milne expects crude prices to fall another $10 a barrel or so before moving higher again — which may take gasoline prices down by 25 cents, possibly in the second quarter.
Cinquegrana sees a peak for U.S. retail prices sometime between Tax day and May 1.
Retailers should not put the 1’s for the price placards away, he said. “The last 100 days of the year will see the national average move back toward $2 a gallon —and probably spend some time below it.”
As of Thursday, the average price for a gallon of regular gasoline stood at $2.425, according to AAA’s Daily Fuel Gauge Report. That’s down from $2.445 a week ago, but up from $2.273 a month ago.
According to AAA, the national average had dropped for a record 123 days in a row to reach a low of $2.03 in January. After hitting that low, prices increased for 40 days straight for a total of 43 cents a gallon — the largest increase in prices since 2013.
The peak so far this year was $2.46 on March 7.
Courtesy: Marketwatch
