CINCINNATI – After dropping to a low of $1.76 in April, the national gas price average is pennies away from hitting the $2/gallon mark. Today’s average is $1.96, which is eight cents higher than a week ago, 19 cents more than last month, but still a significant 87 cents cheaper than the end of May 2019.
The more expensive pump prices can be attributed to fluctuations in crude and demand. In the past week, crude oil hit its highest price point – nearly $34 per barrel – since the Administration declared the COVID-19 outbreak a national emergency and many states started implementing stay-at-home restrictions. While demand has been increasing since the end of April, it is down 28% compared to the first three weeks of May last year.
“Americans have seen significantly cheaper-than-normal gas prices the past two months. However, those low prices – as well as crude oil prices – have been pushing more expensive” said Jenifer Moore, AAA spokesperson. “While motorists will see pump prices continue to increase, AAA does not expect the summer average to be as expensive as last year’s season.”
One factor that could cause a sudden spike in gas prices is the Atlantic hurricane season, which is June 1 through November 30.
The National Oceanic and Atmospheric Administration predicts the 2020 season will be above normal, potentially resulting in 13-19 named storms. An average Atlantic hurricane season typically produces 12 named storms, including 3 major hurricanes.
Gas prices continue to push more expensive with one dozen Great Lakes and Central states seeing an increase of a dime or more on the week. Kentucky (+14 cents), Minnesota (+12 cents), North Dakota (+11 cents), Missouri (+11 cents) and Wisconsin (+10 cents) saw the largest jumps in the region.
While state gas price averages across the region are more expensive on the month, they continue to be cheaper compared to this time last year by 75 cents to nearly a dollar.
Regional refinery utilization saw a 3% increase – up to 73% – while gasoline stocks held steady at 54 million bbl, in the Energy Information Administration (EIA) latest weekly reports.
Since mid-March, stocks have fluctuated to a high of 60.5 million bbl. However, this latest measurement is the lowest level of the year, which is contributing to more expensive gas prices recently.
Oil market dynamics
At the end of Friday’s formal trading session, WTI decreased by 67 cents to settle at $33.25 per barrel.
Although tension between Hong Kong and China lowered prices on Friday, crude prices generally increased last week amid growing market optimism that domestic crude demand continues to rebound as more states ease stay-at-home restrictions and demand for gasoline has grown.
For this week, crude prices may continue to rise if the market believes that the 9.7 million b/d production reduction agreement for May and June 2020 between the Organization of the Petroleum Exporting Countries and other major crude exporters, including Russia, is helping to rebalance the global oil market as demand remains low due to COVID-19.
For more information, visit www.AAA.com.