Analysis by Dr. Nancy Yamaguchi


The U.S. Energy Information Administration (EIA) has released its data on gasoline and diesel retail prices for the week ended May 8. At the national level, gasoline retail prices dropped significantly by 3.9 cents/gallon, and diesel prices fell by 1.9 cents/gallon. The crude price slump has been reflected in product markets over the past two weeks. Prices fell in all PADDs and major submarkets across the country.


The oil complex continued to see a gradual price increase overnight, though the modest upward trend leveled off this morning. Some analysts have noted that the increase in prices may be the result of bargain hunting rather than any solid change in today’s fundamentals. Most investment houses and analysts forecast that the global supply-demand balance is improving, but the balance is slow in arriving.


Helping to boost prices: OPEC has been more forceful in its statements regarding an extension of the production cuts through the end of 2017. The group is even contemplating a cut that would go below current levels and perhaps continue into 2018. The Schneider Electric industry survey is pointing to a drawdown of U.S. crude and product inventories of approximately 1 – 2 million barrels (MMbbls) crude and 1 MMbbls gasoline and distillate this week. The market will watch for additional data on stock movements from the American Petroleum Institute (API) and the EIA.


West Texas Intermediate (WTI) crude prices remain in the range of $46.00 – $46.50 per barrel (/b) this morning. WTI opened at $46.49/b today, an increase of 14 cents, or 0.30%, above yesterday’s opening price. Current prices are $46.36/b, 7 cents below yesterday’s closing price. WTI crude prices have opened slightly higher for the past two trading sessions. Product prices also have risen in the past two sessions, rebounding more strongly than crude.


Diesel opened at $1.459/gallon in today’s trading session. This was an increase of 1.25 cents (0.86%) above yesterday’s opening price. Current prices are $1.4567/gallon, a small increase of 0.11 cents from yesterday’s closing price. Like crude, diesel prices have opened higher for two days in a row. Prior to this, however, diesel prices had opened lower for 12 of the last 13 trading sessions, shedding 16.84 cents, or 10.2%, since April 12.


Gasoline opened at $1.5234/gallon today, up 1.69 cents, or 1.12%, from yesterday’s opening. Prices are $1.5211/gallon currently, an increase of 0.33 cents above yesterday’s close. Like crude and diesel, gasoline prices have risen in the last two trading sessions. Prices moved down significantly between April 12 and May 5, with gasoline prices opening lower in 15 of the 16 trading sessions. Prices fell by a total of 28.14 cents, or 16.0%, during the April 12 – May 5 period.