Analysis by Dr. Nancy Yamaguchi
Gasoline and diesel retail prices rose at the national level last week, following crude prices up. The Energy Information Administration (EIA) released data on gasoline and diesel retail prices for the week ended May 29. The data are delayed by one day because of Memorial Day observance. At the national level, gasoline retail prices rose by 0.7 cents/gallon. Diesel prices rose by 3.2 cents/gallon. Oil prices surged during the week leading up to the OPEC meeting, but prices have weakened since then. If prices continue to ease, it is likely that this will be reflected in next week’s retail prices.
Futures prices have weakened since the OPEC meeting last week. Some traders had been betting on the idea that the OPEC production cuts might go deeper, and that Turkmenistan and Egypt might join in the production cut agreement for the non-OPEC side. The meeting resulted in a nine-month extension of the existing agreement, which the group had already announced was the consensus position. The steady-as-she-goes approach ultimately adopted is widely thought to be inadequate to cope with oversupply. A spate of selling has resulted.
The cuts made by OPEC are being countered in part by increasing production in the U.S., Canada, Libya and Nigeria. The U.S. active rig count, for example, has climbed by 243 rigs this year, bringing the total rig count to 908 for the week ended May 26. Libya’s National Oil Corporation (NOC) announced plans to raise crude production to 800 thousand barrels per day (kbpd) next month, with a goal of 1.1 million barrels per day (MMbpd) output by August. Libyan crude production has been hamstrung by chronic violence, and production averaged only 390 kbpd in 2016. Libya’s output during the first quarter of 2017 rose to 656 kbpd.
West Texas Intermediate (WTI) crude prices have retreated to the $48.50 – $48.75 per barrel (/b) range this morning. Yesterday brought a price rally that reclaimed the $50/b mark for a time. But prices subsided through closing, and they ended up down by 27 cents for the day. WTI opened at $49.65/b today, a decline of 28 cents, or 0.56%, below yesterday’s opening price. Current prices are $48.61/b, a continued fall of $1.05 below yesterday’s closing price.
Diesel opened at $1.5523/gallon this morning. This was a decline of 0.98 cents (0.63%) below yesterday’s opening price. Current prices are $1.522/gallon, down by another 2.74 cents below yesterday’s closing price.
Gasoline opened at $1.64/gallon today, down slightly by 0.16 cents, or 0.1%, from yesterday’s opening. Prices are $1.611/gallon currently, down 2.79 cents from yesterday’s close.