For 66 days, the national fuel price average remained below the $2 per gallon mark, pushing as cheap as $1.76, according to AAA, but in the past week, the average has increased to $2.03.
Despite the consistent increases at the pump, prices are still significantly cheaper year-over-year. In fact, during the first week of June the past five years, gas prices have typically averaged $2.81.
“The beginning of June has not seen gas prices this low since 2004,” said Jeanette Casselano, AAA spokesperson. “As crude oil prices trend higher and gasoline demand increases, Americans will see gas prices push more expensive, but this summer will be cheaper than last.”
U.S. gasoline demand continues to show increasing strength. The Energy Information Administration’s (EIA) latest reading shows a 4% weekly increase at 7.5 million b/d. That is the highest demand level since states began issuing stay-at-home orders in mid-March.
Great Lakes and Central States
Indiana (+12 cents), Missouri (+11 cents), Kentucky (+10 cents) and Kansas (+9 cents) saw the largest pump price increases in the Great Lakes and Central states region. They also land on the top 10 list for largest weekly increases in the country. All other states in the region saw increases, but they were only 2 to 4 cents.
Illinois ($2.29) ranks as the 7th most expensive state average in the country and the highest in the region. On the other end of the spectrum, Missouri ($1.76) and Kansas ($1.77) rank as the 8th and 9th least expensive averages, respectively.
Gasoline stocks in the region drew by about 600,000 bbl to push total stocks down to 54.4 million bbl, according to EIA data. The small draw, combined with mostly steady refinery rates, will likely help to keep any price increases in the week ahead minimal.
South and Southeast
Gas prices are two to five cents more expensive across the South and Southeast on the week. Tennessee (+8 cents) saw the largest weekly increase in the region and ranks among the top 10 biggest changes in the country.
The region continues to lay claim to the cheapest prices in the country – all under $1.99. Eight states land on the top 10 list: Mississippi ($1.66), Texas ($1.69), Louisiana ($1.70), Arkansas ($1.71), Alabama ($1.72), Oklahoma ($1.73), South Carolina ($1.73) and Tennessee ($1.79).
Gasoline stocks saw a significant 2.5 million bbl build to push total stocks to 91.6 million bbl, per the EIA’s latest reports. That is the highest level of stocks seen in the region since social distancing began and is a nearly 9 million bbl year-over-year surplus. Motorists can expect continued price increases, if demand continues to climb, at the pump in the week ahead. Additionally, Tropical Depression Cristobal could impact pump prices in the region, but it depends on the path of the storm and its impact on gasoline production and distribution.
Mid-Atlantic and Northeast
The Mid-Atlantic and Northeast region continues to see the lowest pump price volatility. While gas prices increased across the region on the week, they only pushed more expensive by a few pennies. Delaware (+5 cents) and Maine (+7 cents) saw the largest increases.
Gas prices in the region range from $2.25 to $1.76. In fact, the majority of the states in the region continue to carry gas prices under $2 per gallon with motorists able to fill up for $1.99 or less at 63% of stations in the region.
The EIA reports regional gasoline stocks increased by 500,000 bbl to push total levels to 74.2 million bbl. Motorists can expect pump prices to continue to trend more expensive, but with jumps of only a few cents.
Colorado (+13 cents) and Montana (+10 cents) land on this week’s top 10 list of states with the largest weekly increase. Idaho (+6 cents) is the only Rockies state to not make an appearance on this list two weeks in a row.
Over the past few weeks, pump price increases in Idaho ($2.27) and Utah ($2.27) have pushed the states back on the top 10 most expensive state average list.
Although regional refinery rates were up to nearly 71% in EIA’s latest report, gasoline stocks decreased by 128,000 bbl to 7.6 million bbl. Gas prices are likely to continue to increase in the week ahead, but the rate at which they push more expensive may slow down given recent weekly spikes.
Pump prices in the West Coast region also continue to increase, which contributes to those state averages remaining the most expensive in the country. Alaska (+8 cents) saw the largest increases in the region and is last on today’s top 10 largest weekly increases list. Hawaii ($3.17) and California ($2.95) remain the most expensive markets in the country. Washington ($2.58), Nevada ($2.50), Oregon ($2.49), Alaska ($2.33) and Arizona ($2.21) follow.
According to EIA’s latest weekly report, total gas stocks in the region increased from 29.2 million bbl to 29.8 million bbl last week. Increasing stocks, alongside increasing demand, may help to slow pump price increases this week in the region.
Oil Market Dynamics
At the end of Friday’s formal trading session, WTI increased by $2.14 to settle at $39.55 per barrel. At the end of last week, crude prices increased amid market optimism that the Organization of the Petroleum Exporting Countries (OPEC) and other major crude exporters, including Russia, would extend their 9.7 million b/d production reduction agreement for May and June 2020 into July.
Over the weekend, the cartel and its partners agreed to extend the deal for July, which is expected to reduce global crude supplies by nearly 10 percent while global crude oil demand remains low due to COVID-19. Crude prices will likely increase this week in reaction to OPEC’s announcement.
Additionally, approximately one third of crude oil and natural gas production in the Gulf of Mexico has been halted, as Tropical Depression Cristobal makes landfall in Louisiana. The storm is expected to bring tropical-storm force winds and potential storm surge and flooding to the state’s coastal areas.
There is no estimate for when the facilities will resume operations. Facilities will likely be inspected after the storm has passed to determine if personnel can return safely. Any impact on domestic crude prices will depend on how long production remains shuttered and the extent of damage caused by the storm.