GasBuddy: Prices at the pump could hit $3 a gallon in coming weeks

National/World

(GasBuddy) For the second straight week, the national average price of gasoline has risen, posting a 0.7 cent per gallon rise from a week ago to $2.89 per gallon Monday according to GasBuddy data compiled from more than 11 million individual price reports covering over 150,000 gas stations across the country. The national average now stands 1.8 cents higher than a month ago and $1.13 per gallon higher than a year ago. The national average price of diesel has risen 0.4 cents in the last week and stands at $3.07 per gallon. The national average now stands nearly identical to this date two years ago when prices averaged $2.90 per gallon.

“The nation’s gas prices perked up again last week as oil prices advanced to fresh multi-year highs on Covid improvements overseas and the switch to summer gasoline, which is basically now complete,” said Patrick De Haan, head of petroleum analysis for GasBuddy. “Last week saw the national average hit its highest level in two years, and with continued recovery in gasoline demand, the increase in price is likely to continue into the future. Americans may now want to brace themselves for the possibility of a $3/gal national average in the weeks ahead, as demand remains strong as Americans take to the roads. The question going forward is how much demand will continue to recover and rise – will it lead to record summer gasoline demand? We indeed may see some weeks with new records as Americans get in their cars this summer – but the question is how many will do so? That will determine how much higher prices will go.”

OIL PRICES

The price of a barrel of West Texas Intermediate crude oil rallied again last week and into the start of the new work week, climbing 29 cents in early Monday trade to $63.87 per barrel, up nearly $3 from last Monday’s $60.91 level. Brent crude oil was also 14 cents higher at $66.90 this morning, a $2 rise from last Monday’s $64.80 per barrel price. Inflows into crude oil contracts was seen up, likely helping to propel oil prices higher, while economic optimism ramped up in the U.S. after strong earnings reports last week from U.S. companies including Facebook, Apple and Amazon lifted prospects of continued economic recovery.

The number of oil rigs in service also rose in the U.S. by 2 in the last week, with 440 rigs in operation, up 32 from a year ago. The Canadian rig count fell by 4 to 51, still nearly double last year’s 27 active rigs. As oil prices remain strong, we may see additional rigs coming online in the weeks ahead.

OIL INVENTORIES

The Energy Information Administration last week reported a small 100,000 barrel decline in both oil and gasoline inventories, while distillate inventories fell a more sizable 3.3 million barrels. Oil inventories now stand some 6.5% below year ago levels, while gasoline inventories are 9.4% lower than a year ago and more importantly down 3% from the five-year average for this time of year. Refinery utilization increased 0.4 percentage points to 85.4%, as refiners continue to respond to rising demand as the nation’s Covid recovery continues. Implied gasoline demand, a proxy for retail gasoline demand, fell to 8.88 million barrels per day, or 227,000 barrels per day lower than last week. Domestic oil production also fell 100,000 barrels per day to 10.9 million barrels per day, according to EIA.

FUEL DEMAND

According to a new dataset being released by GasBuddy, U.S. gasoline demand rose for the first week in the last four. Nationally, gasoline rose fell 3.0%, while demand rose 2.6% in PADD 1, rose 5.0% in PADD 2, rose 1.7% in PADD 3, rose 0.9% in PADD 4 and fell 0.2% in PADD 5.

GAS PRICE TRENDS

The most common U.S. gas price encountered by motorists was $2.69 per gallon, unchanged from last week, followed by $2.79, $2.59 and $2.89.

The average cost at the priciest 10% of stations stands at $3.86 per gallon, up 7 cents from a week ago, while the lowest 10% average $2.45 per gallon, up 1 cent from a week ago.

The median U.S. price is $2.78 per gallon, up 1 cent from last week and about 11 cents lower than the national average.

The states with the lowest average prices: Mississippi ($2.55), Texas ($2.55) and Louisiana ($2.57).

The states with the highest priced states: California ($4.03), Hawaii ($3.72) and Nevada ($3.49).

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