Fuel prices well ahead of last year.
Oil markets have been stuck in a range for much of the past month and that has left retail gasoline prices flat to a bit lower to start February. However, prices are running significantly higher than they were in early February 2016.
Crude oil prices averaged anywhere from just under $51 per barrel to $53.99 per barrel during the month of January as traders continued to weigh OPEC and non-OPEC production cuts against expectations of higher U.S. crude oil output. Until some hard data comes out on OPEC progress, which is due out later this month, the market is expected to be mostly stuck in the low to mid $50 per barrel range.
Retail gasoline prices start the month at $2.276 per gallon, a drop of 6 cents from the beginning of January. Current prices though are almost 50 cents higher than at this time last year and the spread between 2016 and 2017 should widen throughout the month. That’s because February 2016 was when the futures market was seeing multi-year lows for oil gasoline and diesel.
Gasoline supplies appear to be on solid footing though the year-on-year surplus is getting thinner. Although at the retail level low RVP gasoline is not really a thought, but on the West Coast the spot markets are already moving summer-grade gasoline. As a result some of the highest wholesale prices in the country are being found in Southern California. That trend slowly moves West to East as the first quarter closes out.
January demand measurements from the EIA were meager at best with a couple of weeks where the demand figure threatened to fall below the 8 million barrels per day level. January is normally the worst month for gasoline demand as weather can be unfriendly to driving and the post-holiday hangover keeps people at home. Additionally U.S. motorists have long memories when it comes to gasoline prices and certainly remember that they were paying well below $2 per gallon for retail gasoline at this time last year.