Gas prices may have hit bottom, analysis suggests

WASHINGTON, May 17 (UPI) -- U.S. retail gasoline prices have been relatively stable against an increase in oil prices, but are likely set for a rally in the coming days, analysis finds.

Motor club AAA reports a national average retail price for a gallon of regular unleaded gasoline at $2.23, about 1 percent higher than this time last week. That's compared with a 15 percent increase in the price for crude oil, which accounts for the bulk of what consumers pay at the pump.

"The national average price of gasoline increased slightly over the past week, and it is likely that prices are heading for a new 2016 high in the coming days," AAA said in a weekly retail market report. "Gas prices are rising due to more expensive crude oil costs brought about by wildfires in Canada and supply disruptions in other oil-producing countries."

Political crisis in Venezuela, coupled with violence in Nigeria and wildfires in Canada, have put supply-side pressures on oil prices, while some indicators suggest demand may be increasing in India and China. All three of the oil-producing nations in crisis are major suppliers to the U.S. market.

For the Midwest in particular, AAA said retail prices are seeing a rise in response to Canadian wildfires, which impacted roughly 1 million barrels per day worth of crude oil production. Drivers in Illinois are seeing an average price that's 10 cents per gallon higher than the national average price as regional refiners struggle to keep up with demand against the shortage in supplies.

On the retail side, AAA said demand is moving up as summer driving season approaches and more consumers start taking advantage of gasoline prices that are nearly 20 percent, or around 50 cents, less than this time last year. According to data from the U.S. Energy Informational Administration, consumer demand last week hit its highest level since August.

Most analysts suggest the price for crude oil, down about 25 percent from one year ago, are on the rebound as markets return to a balance between supply and demand. This may indicate retail prices at the pump may be at their lowest in a decade before a rebound next year.

Patrick DeHaan, a senior analyst with GasBuddy.com, said consumers may want to test the strains on demand and hit the road while prices are still supportive for travel.

"I don't see our current environment of a healthy economy and low gas prices repeating itself again soon, so my advice to motorists is simple: Don't delay your summer travel plans," he said in an emailed statement.

By this time next year, DeHaan said the retail average may be closer to $2.70 per gallon.