Retail gasoline prices at lowest level of the year.
Gasoline prices are averaging $2.26 per gal, a few cents less than last year and the lowest they have been in all of 2017. Experts predict that gasoline prices are likely to remain at bay over the next few weeks with production in July and August are forecasted to break records established earlier this year. Analysts expect that July and August consumer demand will at least match the levels of 2017, but the increased production will keep inventories comfortable.
Two major game-changers need to be monitored.
First, it’s clear that exports of gasoline from the U.S. Gulf Coast, and occasionally from the other coasts, will be higher than in previous years. Countries supplied by Petroleos de Venezuela are likely to turn to U.S. refiners for more of their product, and the Mexican refinery system is also likely to be crippled by poor utilization. A case for exports in the 500,000-700,000 barrels per day neighborhood can easily be made, and that could crimp supplies and push prices north.
The second potential game-changer is tougher to predict and can be included as a caveat in every midyear forecast through 2020. If a Gulf Coast hurricane merely threatens the geography that stretches from Corpus Christi, Texas to Pascagoula, Mississippi, the precautionary shutdowns of refineries will immediately tighten Gulf Coast-supplied states. Earlier this year, some handicappers noted that the probability of a hurricane not impacting that geography for twelve years was something close to one in two thousand. Weather experts believe that the area is overdue for an impactful storm.
Meantime, diesel prices are just below $2.50 per gallon and expected to hold steady over the next several weeks.