Analysis by Dr. Nancy Yamaguchi
The Energy Information Administration (EIA) released its weekly data on diesel and gasoline retail prices for the week ended February 19, 2018. Refined fuel prices continued to fall, following crude prices. At the national level, gasoline prices dropped by 5.0 cents per gallon, while diesel prices fell by 2.3 cents per gallon. Gasoline and diesel prices fell in all PADDs countrywide.
During the week ended February 16, WTI crude prices reclaimed $2.56/b, after crashing by $5.90/b during the prior week ended February 9. Friday’s market saw WTI prices close at $61.68/b, up from $59.20/b a week prior.
Crude prices ran up more quickly than expected in January, but most of the gains were handed back in February. Gasoline and diesel prices followed this general trend. Retail prices have eased over the past two weeks. It will take a more prolonged relaxation of the crude price environment, however, to move retail prices down significantly.
Exerting downward pressure on crude prices: US crude production continues to expand, hitting the 10-million-barrel-per day (MMbpd) mark in early February. The latest data from the EIA places US crude production at 10.271 MMbpd during the week ended February 9. Most forecasts expect production to surpass the 11-MMbpd mark in the coming year.
Exerting upward pressure on crude prices: the OPEC production cuts remain in place, and the participants maintain that global inventories are coming under control, particularly as demand picks up.
For the current week ended February 19, diesel prices fell by 3.6 cents to arrive at an average price of $3.027 gallon. US national average retail diesel prices have exceeded $3/gallon for six consecutive weeks. With the recent rebound in crude prices, it is possible that prices will remain above $3/gallon next week as well.
In the East Coast PADD 1, diesel prices declined 2.9 cents during the week to average $3.082/gallon. In early January, PADD 1 joined PADD 5 in having diesel prices above $3/gallon. Within the PADD, New England prices fell by 2.5 cents to average $3.129/gallon. Central Atlantic diesel prices decreased by 3.2 cents to average $3.274/gallon. This submarket has had diesel prices above $3/gallon for the past fifteen weeks. Lower Atlantic prices decreased by 2.7 cents to arrive at an average price of $2.939/gallon. PADD 1 prices were 45.4 cents/gallon above their prices for the same week last year.
In the Midwest PADD 2 market, retail diesel prices fell by 5.0 cents to average $2.970/gallon. Three weeks prior, PADD 2 became the third PADD, following PADD 5 and PADD 1, to have retail diesel prices exceed $3 per gallon, and its prices have now receded below the $3/gallon level. Prices were 47.5 cents/gallon above their level for the same week last year.
In the Gulf Coast PADD 3, retail diesel prices decreased by 3.3 cents to average $2.818/gallon. This price was 38.5 cents higher than for the same week in the previous year.
In the Rocky Mountains PADD 4 market, retail diesel prices declined by 1.9 cents to average $2.953/gallon. PADD 4 prices were 40.5 cents higher than in the prior year.
In the West Coast PADD 5 market, retail diesel prices decreased by 3.3 cents to average $3.399/gallon. This price was 52.3 cents above its level from last year. Prices excluding California fell by 3.5 cents to average $3.072/gallon, which was 30.5 cents above the retail price for the same week last year. California diesel prices fell by 3.1 cents to an average price of $3.658/gallon. This price was 69.2 cents higher than last year’s price. Until six weeks ago, PADD 5 had been the only PADD to have diesel prices above $3 per gallon. The upward trend around the country brought retail averages above the $3/gallon mark on the national level since the week ended January 15. Prices eased as crude oil prices fell, but the current crude oil price rebound may halt the downward trend in refined fuel prices.
U.S. retail gasoline prices dropped by 5.0 cents during the week ended February 19, to arrive at an average price of $2.557/gallon.
For the current week ended February 19, East Coast PADD 1 retail prices for gasoline decreased by 4.7 cents to $2.559/gallon. The average price was 26.5 cents higher than last year’s price. Within PADD 1, prices declined by 3.8 cents in New England to reach $2.603/gallon. Central Atlantic market prices fell by 3.1 cents to $2.693/gallon. Prices in the Lower Atlantic market fell significantly by 6.2 cents, to an average price of $2.446/gallon. This was 24.5 cents higher than last year’s average price for the same week.
In the Midwest PADD 2 market, retail gasoline prices dropped sharply by 7.3 cents to arrive at an average price of $2.390/gallon. Gasoline pump prices were 20.7 cents higher than they were one year ago.
In the Gulf Coast PADD 3 market, gasoline prices fell by 5.5 cents to average $2.276/gallon. PADD 3 continues to have the lowest average prices among the PADDs. Prices for the week were 20.7 cents higher than for the same week in 2017.
In the Rocky Mountains PADD 4 market, gasoline pump prices decreased by 2.4 cents to average $2.486/gallon. PADD 4 prices were 23.4 cents higher than at the same time in 2017.
In the West Coast PADD 5 market, retail gasoline prices declined by 1.2 cents to arrive at an average price of $3.130/gallon. This was 38.0 cents higher than at the same time a year ago. PADD 5 typically has the highest gasoline prices among the five PADDs. During the seven weeks of 2018 to date, PADD 5 has been the only PADD where prices have exceeded $3/gallon. Excluding California, West Coast prices fell by 1.6 cents to an average of $2.752/gallon. This was 25.6 cents higher than at the same time in 2017. In California, prices decreased by 0.9 cents to arrive at an average pump price of $3.349/gallon. California prices were 45.1 cents per gallon above their levels from last year.