With the Labor Day weekend less than two weeks away, motorists continued to enjoy stability at the gas pumps this week as the summer driving season draws to a close. The average U.S. retail price for regular gasoline dropped 2 cents this week to $2.63 a gallon Friday. The current price is $1.07 below year-ago prices and $1.48 below the record price of $4.11 set last July.
Crude oil traded at a 2009-high above $74 a barrel on Friday before closing at $73.89, up over 7% on the week and the highest settle since October 2008. Current prices remain just about half of last July’s record above $147 a barrel. After relatively stable prices early in the week, crude oil surged at week’s end, tracking stocks, the U.S. dollar and continued optimism of economic recovery which would likely lead to increased fuel demand. Crude oil sustained its late-week gains Friday following Federal Reserve Chairman Ben Bernanke’s speech before a Federal conference where he stated the global economy was on the mend, though critical challenges remain and recovery will be a slow process.
The weekly Energy Information Administration (EIA) report showed U.S. crude inventories dropped 8.4 million barrels to 343.6 million barrels, defying the 1.3 million build forecast. U.S. gasoline supplies fell 2.1 million barrels to 209.8 million barrels, greater than the forecast for a 1.1 million barrel drop. Also this week, the American Petroleum Institute’s (API) inventory report showed crude stocks down 6.1 million barrels and gasoline supplies down 847,000 million barrels.
Weakened demand continued, but analysts believe there are some signs of improvement. The American Petroleum Institute (API) said U.S. oil demand in July was down 3% year-on-year, compared to the 6% drop in the first half of 2009. The Federal Highway Administration released data at the end of the week showing that Americans drove two-percent more vehicle miles in June, the third consecutive monthly increase. Cumulatively this year, driving is essentially flat, down .4 percent.
The Weekend
“Motorists are enjoying relatively stable prices at the gas pump as the summer driving season winds down,” said David Weinstein, Manager of Public and Government Affairs for AAA Mid-Atlantic. “With the Labor Day weekend approaching and back-to-school underway, AAA expects motorists will be able to hit the road without any significant price spikes.”
The Week Ahead
Hurricane Bill weakened Friday, but remained a dangerous storm expected to travel north between Bermuda and the U.S. East Coast before hitting eastern Canada over the weekend, according to the National Hurricane Center. The North American energy market will continue to watch Bill for potential threats to oil and natural gas platforms and refineries in eastern Canada.
Although the market has seen signs of positive economic growth in recent weeks, most data suggests economic activity will remain slow for some time. If this is the case, oil prices will likely remain within their current $60-$80 price range through the end of the summer and into early fall. As a result, retail gasoline prices will continue to hover around their current levels as motorists wind down the summer driving season. In the weeks ahead, oil markets will focus on OPEC’s September 9th meeting, where the group is expected to leave output unchanged. Last year OPEC agreed to a series of output cuts to help ease the sharp decline in oil prices.
Dennisville – As a parent of a Tech student it would be great if the school would update their staff directory. So many old staff still listed and no new teachers listed. What gives?
