On the heels of five straight weeks of decline, gas prices held steady for the most part this week as much of the Mid-Atlantic region continued to deal with after effects of back-to-back major snow storms. The national average price of regular grade gasoline dropped a penny this week to $2.62 Friday. This is 14 cents below its 2010 peak price of $2.75 from mid-January, 67 cents lower than year ago prices and still $1.49 below the record prices set in July 2008.
Although gasoline demand continued to be flat, crude oil rallied this week to break through the $78 mark on Thursday, only to fall more than a dollar early Friday on the heels of U.S. Federal Reserve raising an emergency lending rate which strengthened the U.S. dollar. Prices rose toward $80 a barrel later Friday as refinery strikes in France and tensions about Iran’s nuclear program outweighed fears that Federal Reserve’s interest rate hike could slow demand growth in the world’s largest oil consumer. Crude settled at $79.81 for the week.
The Energy Information Administration (EIA) reports the lowest single-week gas demand since January, 30, 2004, barely above 8.5 million barrels per day (bpd). In addition to winter weather curbing gasoline demand, the weak job market continues to weigh on oil demand in the U.S. Without notable signs of improvement, gasoline demand will continue to be down because fewer motorists are commuting to work and in turn limiting discretionary leisure travel.
This week’s EIA report also showed crude stocks up 3.1 million barrels to 334.5 million barrels last week, more than the forecast for a 2.2 million barrel build and against the American Petroleum Institute’s (API) reported 63,000 barrel drawdown. Gasoline stocks rose 1.7 million barrels, above the forecasted 1.5 million barrel increase and the API’s 1.4 million barrel build.
The Weekend
“Gas prices have remained relatively stable this month, hovering between $2.61 and $2.67 nationally,” said Tracy Noble, Public Affairs Specialist for AAA Mid-Atlantic. “However, in light of this week’s spike in crude oil prices above the $75 mark, motorists should begin to see gas prices inch slightly higher in the coming days.”
The Week Ahead
Concerns over Iran’s nuclear program could boost crude oil prices in the coming weeks after a U.N. nuclear watchdog said it feared Iran may be working to develop a nuclear-armed missile. The U.S. has warned Tehran of consequences for ignoring international demand to stop its atomic plan, however, the nation says its program is for electricity generation. Iran is the world’s 4th largest producer of crude oil.
CURRENT AND PAST GAS PRICE AVERAGES
Regular Unleaded Gasoline (*indicates record high)
2/21/10 | Week Ago | Year Ago | |
National | $2.64 | $2.62 | $1.93 |
New Jersey | $2.52 | $2.53 | $1.78 |
Trenton | $2.53 | $2.54 | $1.82 |
Cape May County | $2.50 | $2.50 | $1.77 |
Burlington County | $2.50 | $2.49 | $1.76 |
Middlesex, Somerset, Hunterdon | $2.53 | $2.53 | $1.79 |
Monmouth, Ocean Counties | $2.49 | $2.50 | $1.78 |
Crude Oil | $79.81 per barrel (close on Friday) | $74.01 per barrel | $37 per barrel |
