Motorists saw some positive change at the pump on the week with 31 state gas price averages declining one to five cents, according to AAA. The national gas price average pushed two cents cheaper to $3.15. One factor contributing to the decline was U.S. gasoline demand remaining relatively flat on the week.
At this point, it is too early to say if cheaper pump prices will be sustained or continue their downward trend. Part of the unknown is due to fluctuating crude prices, which dropped to a low of $66/bbl last Monday, but were back over $70/bbl by the end of the week. Prices initially dropped following news from the Organization of the Petroleum Exporting Countries (OPEC) that they have reached a deal to increase production in August. However, that promise has been compromised by concerns about the rise in COVID case numbers and how that could negatively affect global demand.
“For pump prices to push less expensive, OPEC will need to follow through with their production increases, crude will need to sell consistently at lower prices and the market will need to adjust to the potential resurgence of COVID cases,” said Jeanette McGee, AAA spokesperson. “If these factors prove true consistently, pump prices could be less expensive in August, though the national average could still be at or above the $3 per gallon mark.”
Since the beginning of July, gas prices have averaged $3.14. Today’s national average is more expensive on the month (+6 cents) and the year (+97 cents).
The nation’s top 10 largest weekly changes: Idaho (+8 cents), Utah (+8 cents), Nevada (+7 cents), Ohio (−7 cents), Kentucky (−5 cents), Michigan (−5 cents), Wyoming (+4 cents), Indiana (−4 cents), Oklahoma (−3 cents) and Kansas (−3 cents).
The nation’s top 10 least expensive markets: Mississippi ($2.77), Louisiana ($2.80), Texas ($2.81), Missouri ($2.82), Alabama ($2.82), Oklahoma ($2.84), Arkansas ($2.84), Tennessee ($2.86), Kentucky ($2.88) and North Carolina ($2.89).
Oil Market Dynamics
At the close of Friday’s formal trading session, WTI increased by 16 cents to settle at $72.07. Although crude prices tumbled last week to $66 per barrel due to market concerns that the spread of the COVID-19 Delta variant will slow potential economic growth and demand, market concern about the ongoing pandemic reversed by the end of the week and pushed crude prices higher. Prices increased despite the Energy Information Administration reporting that total domestic crude inventories rose by 2.1 million bbl to 439.7 million bbl and plans by OPEC to increase production next month. For this week, crude prices could decline if market concerns about demand grow.