By Brian L. Milne, Refined Fuels Editor, Telvent DTN
The regular grade retail gasoline price average for the United States continues to hold near this year’s $2.905 gallon high reached in May, reported last at $2.892 gallon by the Energy Information Administration (EIA), boosted by tight supply in the Northeast and a weaker dollar.
The high prices, with retail values over $3 gallon in California, New York City and quickly approaching that high watermark in Florida, come right in front of Thanksgiving holiday travel.
Lost gasoline imports have been a key feature in the contra-seasonal rally in gasoline prices. The New York and Boston markets heavily rely on gasoline imports from Canada and Europe to cover the shortfall in regional production and piped in product from the Gulf Coast.
Extended refinery maintenance in Canada coincided with downtime at a key refinery in New Jersey, which still remains shut, pushing up bids in open market trade. Meanwhile, October strikes in France that had closed ports, refineries and key roadways have dramatically cut imports to the Northeast, prompting inventory drawdown and higher wholesale gasoline costs.
During the week-ended Nov. 12, the EIA shows imports tumbling to their lowest level in nearly seven years. Meanwhile, implied demand for the four-week period ended Nov. 12 was up 1.8% against the comparable year-ago period, although year-on-year growth is up a modest 0.4%.
Higher wholesale prices in the Northeast ran contrary to weakening values observed in the Midwest and Gulf Coast markets last week. Wholesale costs in the Chicago market weakened sharply.
Gasoline prices are also being pushed up by dollar weakness, although the greenback did rebound off early November lows on debt issues in Ireland that pressured the euro.
Late last week, oil markets were also under downside pressure on concern over lower demand from China. Beijing last week took steps to combat soaring inflation, which reached a better than two-year high in October.
Chinese banks are now required to hold more reserves in an attempt to reduce borrowing. Analysts suggest this will reduce the amount of oil the country buys, with China’s ferocious appetite for commodities supporting higher global prices. A slowdown in China is seen reducing world demand for oil.
Meanwhile, holiday road travel this Thanksgiving is expected to be robust, with AAA projecting 39.7 million people traveling by automobile from Nov. 24 through Nov. 28. That’s up 12% from a year ago, while accounting for 94% of all expected holiday travelers.
About the Author
Brian L. Milne is the Refined Fuels Editor for Telvent DTN-a leading business-to-business provider of real-time commodity information services. Milne has been focused on the energy industry for more than 14 years as an analyst, journalist and editor. He can be reached at [email protected]