Analysis by Dr. Nancy Yamaguchi

 

The U.S. Energy Information Administration (EIA) released its weekly data on diesel and gasoline retail prices for the week ended July 2, 2018. Prices for both fuels rose, breaking a four-week trend of gradual price easing. On a national average basis, gasoline prices rose by 1.1 cents, and diesel prices rose by 2.0 cents. Gasoline prices rose in PADDs 1, 2 and 4, and they declined in PADDs 3 and 5. Diesel prices rose in all PADDs countrywide.

In last week’s update, we noted the recovery of crude prices, which rose by $3.68/b during the week ended June 22. WTI crude prices surged even higher during the current week ended June 29, adding another $5.94/barrel. WTI prices closed the week of June 29th at a multi-year high of $74.15/b. As of the time of this writing, WTI forward prices are approximately $74.75/b, and trading highs have nearly touched $75/b. Product prices are following crude on this upward path.

Outages in Canada and force majeure in Libya are feeding supply concerns, overcoming strong production in the US plus the expected increase in OPEC output.

For the week ended June 22, US crude production once again (for three weeks running) remained unchanged at 10,900 bpd. This was a significant event, since during the entire year to date, there had been only two weeks when US crude production did not rise. For the year to date through the week ended June 22nd, US crude production has risen by 1.408 mmbpd.

For the current week ended July 2, diesel prices increased by 2.0 cents to arrive at an average price of $3.226/gallon. Prices rose in all PADDs. The national average price was 76.4 cents per gallon higher than it was one year ago.

In the East Coast PADD 1, diesel prices increased by 1.1 cents to arrive at an average price of $3.226/gallon. Within PADD 1, New England prices edged up by 0.1 cents to average $3.282/gallon. Central Atlantic diesel prices rose by one cent to average $3.390/gallon. Lower Atlantic prices rose by 1.6 cents to arrive at an average price of $3.102/gallon. PADD 1 prices were 70.4 cents/gallon above their prices for the same week last year.

In the Midwest PADD 2 market, retail diesel prices increased by 2.8 cents to average $3.171/gallon. Prices were 76.8 cents/gallon above their level for the same week last year.

In the Gulf Coast PADD 3, retail diesel prices rose by 2.4 cents to average $3.002/gallon. This price was 69.5 cents higher than for the same week in the previous year. Until the week ended May 14, PADD 3 had been the only market where diesel prices had remained below $3/gallon. Last week, prices dipped below $3/gallon once again, but the current price resurgence has brought diesel prices in all PADDs back above the $3/gallon mark.

In the Rocky Mountains PADD 4 market, retail diesel prices increased by 3.7 cents to average $3.358/gallon. PADD 4 prices were 77.3 cents higher than in the prior year.

In the West Coast PADD 5 market, retail diesel prices increased by 1.1 cents to average $3.746/gallon. This price was 98.7 cents above its level from last year. Prices excluding California rose by 2.2 cents to average $3.475/gallon. This price was 84.7 cents above the retail price for the same week last year. California diesel prices edged up slightly by 0.1 cents to arrive at an average price of $3.960/gallon. Four weeks prior, California prices had topped the $4/gallon mark, and prices are once again approaching this level. California diesel prices were 109.4 cents above last year’s price. California is the only state where diesel prices are more than a dollar per gallon higher than they were last year.

U.S. retail gasoline prices rose by 1.1 cents to average $2.844/gallon during the week ended July 2nd. Prices rose in PADDs 1, 2 and 4. Prices fell in PADDs 3 and 5. The national average price was 58.4cents per gallon higher than it was one year ago.

For the current week ended July 2, East Coast PADD 1 retail prices for gasoline increased by 0.8 cents to average $2.769/gallon. The average price was 56.6 cents higher than last year’s price. Within PADD 1, New England prices increased by 0.7 cents to average $2.882/gallon. Central Atlantic market prices rose by 0.5 cents to average $2.909/gallon. Prices in the Lower Atlantic market rose 1.2 cents to average $2.652/gallon.

In the Midwest PADD 2 market, retail gasoline prices rebounded significantly by 4.4 cents to arrive at an average price of $2.762/gallon. Gasoline pump prices were 62.3 cents higher than they were one year ago.

In the Gulf Coast PADD 3 market, gasoline prices dropped by 1.1 cents to average $2.604/gallon. PADD 3 continues to have the lowest average prices among the PADDs. Prices for the week were 59.8 cents higher than for the same week in 2017.

In the Rocky Mountains PADD 4 market, gasoline pump prices increased by 0.8 cents to average $2.968/gallon. PADD 4 prices were 62.2 cents higher than at the same time in 2017.

In the West Coast PADD 5 market, retail gasoline prices dropped by 1.6 cents to arrive at an average of $3.393/gallon. This was 57.7 cents higher than at the same time a year ago. PADD 5 continues to have the highest gasoline prices among the five PADDs. During the year to date, PADD 5 has been the only PADD where retail gasoline prices have exceeded $3/gallon. Excluding California, West Coast prices declined by 1.3 cents to average $3.206/gallon. This was 61.3 cents higher than at the same time in 2017. In California, pump prices dropped by 1.6 cents to average $3.546/gallon. California prices were 60.0 cents per gallon above their levels from last year.