Gas Prices Hit Five Month Highs As Cost Surge Continues

Mixed Forecasts Predict Crude Could Soar Or Be About To Top Off. weekly gas price trend

A bounty of uncertainty appears to be affecting the commodities trading floor these days, at least where it concerns the direction of crude oil prices. One thing is for certain, however, and that is we are all paying more for gasoline. In fact, the latest survey from the U.S. Energy Information Administration shows the national average price for a gallon of regular unleaded spiked at $3.44, the first time it has been above $3.40 since the end of September.

Drivers in many regions have been paying considerably more than the national average, though. The pricing news is turning ever more bitter in some survey areas, such as the West Coast, where the cost of a gallon of gas has now hit $3.65.

At the state level, drivers in California, Colorado and Florida experienced the worst week over week price increases. Region by region, the cost of driving is likely to continue to rise during March, primarily due to spikes in crude oil prices in February. Those increases were driven by dwindling supply, increased overseas demand and geopolitical instability.

Some of that instability has waned, but a rash of political instability in Venezuela threatens to disrupt that supply source, and there are worsening supply problems in Libya, where daily production is now about 20-percent of what it was last summer.

Commodities Traders Divided About Crude Prices Going Forward.

All of this points to uncertainty about global markets going forward, which means the American pocketbook could take a hit. A number of factors could put upward pressure on futures prices, which would be bad news for drivers. Those pressures including lingering problems in overseas supply, which means North American oil production would have to quench more of the global thirst for fuel. That could mean, too, that earlier EIA forecasts for lower gas prices in 2014 will fall flat, leading to a return to the price points seen in early 2013.

$5 Gas Prices Before Year End? That Depends.

May 2011 gas prices
Gas prices in Fort Lauderdale, Florida as they were in May 2011, two months after the WTI hit fresh highs. But prices then did not hit the $110 per barrel threshold, which one analyst is predicting could happen within the next three months.

The bigger issue, then, is how suppliers respond. Will production be increased to meet the anticipated growth in global demand, stabilizing the futures markets, or will demand exceed the ability of suppliers to keep pace? Sean Hyman of Moneynews told CNBC on Tuesday he expects demand will cause WTI to surge over the next three months, closing between $110 and $113 per barrel, further predicting WTI has the potential to go as high as $140 per barrel. Even if West Texas Intermediate rises to $113 per barrel, that could be enough to push retail gas prices up to and over $5.00 per gallon.
But Citigroup analyists say WTI has peaked for the quarter and, possibly, for the year.

Edward Morse, the head of commodities research at Citigroup, predicted the price of WTI would rise in the second half of the year, but only after going through a series of declines during the rest of Q1 and through the second quarter.

At the moment, WTI has come off its February highs, at least so far, but it remains above the crucial $100 per barrel threshhold.

Part of the reason for the about-face in WTI prices is an expected inventory boost, but that will not be known for certain until Wednesday morning. And while Citigroup is predicting the cost of WTI has hit a high for the first quarter of 2014, it did raise its overall WTI price target for 2014 by one dollar.

Notably, Citi raised its Brent forecast for 2014 considerably, from $98 to $103, signaling an expected decline in overseas production.


Gas Prices Shoot Higher, More Prices Increases Expected In March

Nasty Winter Weather, Political Instability and China Demand Drive Crude Futures Higher

weekly gas price trendThe cost of a gallon of gas jumped over 7¢ per gallon during the past week, according to the latest weekly survey from the U.S. Energy Information Administration. The EIA’s weekly report showed prices in all regions soared anywhere from 6¢ to over 10¢ per gallon. A conspiracy of factors has pushed the average U.S. price of a gallon of unleaded gasoline to $3.38 per gallon, their highest levels since the start of October 2013, when prices on a national level were at $3.37 per gallon.

The price increases are due in part to wicked winter weather, which has also caused a surge in natural gas prices. The increase in global demand has also contributed to higher prices on futures markets, namely the all-important West Texas Intermediate, which had been flirting with the $100 level for weeks. The WTI closed above $103 Wednesday afternoon at $103.31.

The greatest overseas demand has come from China, which has offset a renewed availability of crude oil in the United States.

Gas Prices Likely To Surge On Futures Prices And More Cold Weather

oil refinery on frozen Mississippi
Oil refineries in the U.S. are struggling to keep up with demand for natural gas, heating oil, and renewed global demand.

The price of oil futures could go even higher as global demand continues to increase, and refineries are having particular difficulty keeping up with natural gas and heating oil demand amid a lingering winter across much of the United States. Another blast of cold air is expected at the end of the week and through the weekend, which will further strain refineries and  suppliers already struggling to keep pace with consumers’ needs.

Add to that the growing demand for oil in China, and a perfect storm of conditions exists to push the WTI Crude Oil index up to, and perhaps past, its 52-week high of $104.52, a level that was seen during the Syrian war scare crisis during late July and early August 2013. Late July prices peaked near $3.70 per gallon, a rate that is already perturbing drivers in many states, particularly California.

Prices on Monday were measured at almost exactly that rate across the Golden State, which dragged the broader West Coast gas price average up to $3.57. Take California out of the equation, and the price of fuels on the West Coast is only $3.36 per gallon, just under the national average.

Truckers Feel More Pain At Pump, But Not As Bad As Last Week

The news for truckers was not nearly as bad as for drivers of gas-powered vehicles, but prices of diesel fuel in nearly all regions did increase during the past week, pushing the national average of a gallon of diesel to $3.99.

Many areas, particularly New England and the Central Atlantic states, are paying considerably more, however. Prices in New England average about $4.37 per gallon, and the cost of diesel is about $4.36 per gallon across the Central Atlantic states.

However, prices in each of those regions remained mostly stable during the past week, while increases affected most other regions. California and the Gulf Coast also enjoyed stable prices during the past week.

Year Over Year Prices Down Considerably

Despite what seems like a gloomy gas price report and forecast for American drivers, the price of fuel is down substantially from 2013 levels. At this time last year, the price of a gallon of unleaded was 37¢ higher, which would translate to about $5.55 more for every fillup, for a 15-gallon tank. In some areas, the price of gas is as much as 41¢ per gallon cheaper.

But the numbers for truckers are more mixed. In some regions, like the West Coast and Gulf Coast, the price of diesel is down 30¢ and 28¢ per gallon, respectively. But the cost of fuel in the Atlantic region is up. For truckers driving through the Central Atlantic states, the cost of diesel is over 10¢ higher than at this time last year.


Gas Prices Nudge Higher As Diesel Prices Head Close To $4 Per Gallon

Mixed Regional Numbers Still Add Up To Higher National Average 2014-02-10-trend

The cost of driving got a little more expensive, at least in terms of gas prices, during the past week, according to the latest survey from the U.S. Energy Information Administration. The EIA weekly survey shows the average price of a gallon of unleaded gas increased about two cents to $3.31.

Most drivers, except perhaps those along the West Coast and Midwest, will hardly notice a change in prices, which have been vacillating within one or two cents of their current levels for the past month.

However, in the Midwest, where prices are typically quite volatile, the price of a gallon of fuel jumped nearly a nickel during the past week. Prices in California dragged the West Coast average higher by nearly three cents for most drivers.

Trucking Industry Hit Hard By Consecutive Weekly Price Hikes

Hauling goods over land became more expensive, again, during the past week, as the EIA reports the price of a gallon of diesel jumped anywhere from a penny in the West to over eight cents per gallon along the Atlantic Coast.

Prices along the East Coast, a region plagued by horrific winter storms that have created myriad travel troubles, have jumped by as much as 22 cents per gallon in just two weeks.

Meanwhile, truckers along the West Coast have enjoyed relatively stable prices of diesel fuel, unlike drivers of regular gas-powered vehicles. Only California has been witness to slight price increases in the western regions, and those tend to average only a penny per gallon.

Futures Hit The Century Mark As WTI Spikes

If anything other than weather is to portend higher fuel costs in the coming weeks, it is likely to be the March futures prices for West Texas Intermediate crude. WTI spiked to over $100 per barrel on Monday, and the critical futures index was trading over $101.25 close to the mid-day trading point on Wednesday, February 12.

Brent Light Sweet crude is also higher, spiking once again during the past week to trade closer to $110 per barrel.

crude oil futures charts
A tale of two futures: Brent Light Sweet Crude has been more volatile than WTI, but both have continued to trend higher.

The key difference between the two futures indices is their trend line during the past month. While Brent has been subject to instability resulting from supply and political issues overseas, WTI, which is a domestic crude index has been on a steady climb since the middle of January. It has now surpassed its December highs.

China’s Thirst For Oil Drives U.S. Futures Higher

The price of futures has gone higher despite the fact there is an ample supply of oil for the U.S. The Associated Press reported Wednesday that demand in China was a major factor in the current futures price bids.

“China’s imports of crude rose to 6.6 million barrels a day in January, up nearly 12 percent on the same month last year and the highest figure on record,” the AP reported.


Gas Prices Dip Slightly, But Diesel Spikes Amid Winter Woes

Truckers And Haulers Bear Brunt Of Winter Price Increases Weekly U.S. price trend

The price of gas barely moved during the past week, with the average U.S. price of a gallon of regular unleaded falling about a penny to $3.29, although the cost of fuel along the East Coast did fall about two cents per gallon.

Price increases of about one to two cents in the Midwest offset the East Coast declines to keep the U.S. average from falling any further. The figures are detailed in the regular weekly gas price survey released by the Energy Information Administration.

Meanwhile, truckers felt a torrent of increases in prices at the pump, with the national average of the price of diesel rising almost five cents per gallon. But in the Northeast and along the Central Atlantic, which have been hard hit by winter storms of late, the cost of a gallon of diesel rose as much as 14 cents per gallon in one week.

For truckers and other haulers, the price increases were a grim reminder of the volatility of diesel prices during the winter season, when refineries can sometimes struggle to keep up with demand for home heating oil, propane and natural gas.

Old Man Winter Pushes Distillate Demand Up By 500,000 Barrels Per Day

The EIA reported that demand for distillate consumption, a category of fuels that includes heating oil, had risen ballistically in the past four weeks. As of the end of January, refineries were pushing out an extra half-million barrels per day of distillate fuels. The EIA has further reported that inventories of distillates fell nearly 20% through January 24, with additional declines in inventory expected through the week as a new bluster of winter weather buries the Plains, the Midwest and the Northeast.

Apocalyptic winter weather conditions are playing havoc on diesel prices as much as they are causing treacherous driving conditions. Photo: for

The rise in diesel prices has been met with even higher surges in heating oil and propane costs. Home heating oil rose about 12¢ per gallon during the week last week, but propane prices soard by $1.05 per gallon last week, the biggest one-week increase since 1990, the EIA reported.

Taken in the aggregate, the surge in demand and the corresponding increase in prices has meant drivers of diesel vehicles, particularly truckers, have suffered a hard hit at the pump.

Futures Prices Creeping Higher, Particularly For West Texas Intermediate

Meanwhile, futures  prices have been creeping higher during the past week. Contracts for West Texas Intermediate, for early March delivery, have been slowly edging toward the $100 per barrel mark, a dubious milestone not seen since the end of December. Prices have been hovering  between $96.67 and $98.07 per barrel for the past several days, although prices at mid-week were down slightly.

For Brent Light Sweet Crude, the news is slightly different, with the benchmark’s intercontinental exhanges hovering in a narrow range near $106 for the past several days.


Editor's Note: The original story reflected the national average price of a gallon of gas at $3.30 per gallon, which was incorrect for the week of February 3. The price has been corrected to $3.29 per gallon.