Analysis by Dr. Nancy Yamaguchi
The Energy Information Administration (EIA) has released data on gasoline and diesel retail prices for the week ended May 22. At the national level, gasoline retail prices rose by 3.0 cents/gallon. Diesel prices declined slightly by 0.5 cents/gallon, though prices are expected to begin an upward trend if crude prices continue to strengthen this week. The crude price slump had been reflected in product markets over the past four weeks, but with crude prices now on an upsurge, product prices are rising.
Although yesterday’s prices finished off their highs, West Texas Intermediate (WTI) crude prices remained above $51 per barrel (/b) this morning. The market has made significant gains. Prices for crude, diesel and gasoline have opened higher for the past four sessions. With the OPEC-non-OPEC meeting fast approaching, few analysts anticipate a large sell-off.
Despite market confidence in an extension to the cuts, there is a bit more caution regarding U.S. oversupply in 2018 based on the latest Trump administration budget proposal. The 2018 budget plan proposes to raise money by selling half of the country’s Strategic Petroleum Reserve (SPR), which currently holds a little over 688 million barrels (MMbbls) of crude. The Trump plan would also open the Alaska National Wildlife Refuge (ANWR) to drilling. Proposals to open ANWR for drilling have been floated for decades, but have always been defeated.
The summer driving season has seemed slow in coming, but gasoline demand is expected to receive a boost from the upcoming Memorial Day weekend. The American Automobile Association (AAA) estimates that over 34 million Americans are planning to take a road trip over the three-day weekend, which is 0.8 million more drivers than last year.
WTI crude prices are just above $51/b this morning. Prices eased slightly from their highs yesterday, but early morning trading has brought a small uptick in prices. WTI opened at $51.04/b today, an increase of 44 cents, or 0.87%, above yesterday’s opening price. Current prices are $51.05/b, 8 cents below yesterday’s closing price. Product prices opened higher during the current session, eased overnight and are trending back up in early morning trading.
Diesel opened at $1.600/gallon this morning. This was an increase of 1.16 cents (0.73%) above yesterday’s opening price. Current prices are $1.5992/gallon, a decline of 0.29 cents from yesterday’s closing price.
Gasoline opened at $1.6629/gallon today, up 0.8 cents, or 0.48%, from yesterday’s opening. Prices are $1.6570/gallon currently, down 0.56 cents above yesterday’s close.
