Analysis by Dr. Nancy Yamaguchi
The U.S. Energy Information Administration (EIA) has released retail fuel price data for the week ended August 7. U.S. retail diesel prices have now risen for six consecutive weeks, increasing from an average of $2.465/gallon during the week ended June 26 to $2.581/gallon during the week ended August 7. Weekly diesel prices are $0.265/gallon above their average levels from last year.
U.S. retail gasoline prices have risen for three weeks in a row, increasing from $2.125/gallon during the week ended July 17 to $2.215/gallon during the week ended August 7. Weekly gasoline prices are $0.228/gallon higher than they were for the same week last year.
Although the retail price increases have been significant, they have lagged the increase in futures prices for crude, suggesting that additional increases in retail prices may be expected in the coming week. Between July 24 and August 7, West Texas Intermediate (WTI) crude futures prices rose by approximately 9.5 cents/gallon. Yet retail diesel prices rose by 7.4 cents/gallon, and retail gasoline prices rose by only 6.6 cents/gallon in comparison.
Representatives from key OPEC and non-OPEC oil-producing countries are meeting in Abu Dhabi today to discuss compliance with the production cut agreement. The meetings are private, and findings will be presented to the Joint Ministerial Monitoring Committee. Bloomberg’s survey reports that compliance in July fell to 86%, its lowest level since the cut agreement was launched in January. The International Energy Agency (IEA) reported that, among the key participants, Iraqi compliance fell to just 29% in June, while United Arab Emirates (UAE) compliance fell to around 60%.
Saudi Arabia has noted that it would increase pressure on fellow producers to honor their pledges. Saudi Arabia has reduced its exports to Asia—as it pledged to do this month—and crude prices strengthened in response.
WTI crude opened at $49.31 per barrel (/b), down by 28 cents from yesterday’s opening. As of approximately 8:50 a.m. EDT, WTI prices were $49.46/b, a recovery of 15 cents since today’s opening.