Government Report Shows Retail Prices Jump As Crude Rebounds
In a stunning reversal of course, gas prices lurched upward more than 12¢ on the week as crude oil prices finally leveled off and began to rebound from a six-month period of decline. That means a reversal of fortune, of sorts, for American drivers, as consumer prices are matching the crude oil pricing trend. The weekly gas price survey from the U.S. Energy Information Administration shows the national average price of a gallon of unleaded gas is now $2.19, up from $2.07 last week and a low of $2.04 just two weeks ago.
Regional Prices Spike In West and Midwest
Prices across the West Coast soared on a spike in California gas prices. Retail gasoline in the Golden State hit an average of $2.63 this week, up from $2.44 last week. That spike in costs helped drive the overall West Coast average 7¢ higher to $2.47 per gallon. The Rocky Mountain States bumped the Gulf Coast survey region to become the cheapest place to buy fuel. Average unleaded price across the Rocky Mountain states settled at $1.95 last week. Drivers in Gulf Coast states are paying an average of $1.98.
Midwest gas prices tracked significantly higher for the second consecutive week. A jump in prices last week pushed the broader U.S. average higher; in retrospect, that may become viewed as the portent of things to come nationwide. The Midwest price average is now $2.17 per gallon, up from $1.94 only two weeks ago. As with last week, Ohio led the charge toward higher pricing with a 20¢ per gallon increase in prices, and that beats last week’s 14¢ increase. Minnesota drivers were lashed with a 16¢ per gallon price hike.
Crude Oil Prices Change Direction After Six Months
While futures prices scarcely moved in Monday trading, both domestic and overseas futures indices have been moving higher since January 29, at time when both West Texas Intermediate and Brent Crude were trading below $50 per barrel. WTI closed at $52.43 Monday afternoon, while Brent was at $57.98 per barrel.
The rebound in crude prices is not being called a recovery, however. In fact, a report from Citigroup on Monday, coupled with a warning from the world’s largest independent oil trader, suggests the price of crude could be set to fall into the $30 to $35 per barrel range. Executives of both Citi and The Vitol Group warned Monday that continued oversupply in the United States would drive prices significantly lower, despite slowing spending overseas.
Citigroup’s Edward Morse, head of the company’s global commodities research, wrote that U.S. production levels will likely remain high through the third quarter, putting downward pressure on crude oil prices, particularly WTI, the U.S. domestic benchmark. The Vitol Group’s Chief Executive, Ian Taylor, concurred, in an independent opinion. Taylor said Monday he believes it possible another downward move in crude oil is coming, and he said U.S. production was the driving force behind that potential. Taylor said the market looks long for the first half of the year, but he predicted the oil market will “move into balance” in the second half of 2015.