U.S. gasoline prices follow the drop in oil prices

After closing earlier this month at just over $80 per barrel, the price of crude oil declined 5 percent thanks in part to OPEC.
By Daniel J. Graeber Follow @dan_graeber Contact the Author   |  May 30, 2018 at 6:04 AM
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May 30 (UPI) -- The average price for a gallon of gas nationally came close to $3 per gallon during the long U.S. holiday weekend, but could be stabilizing, analyses find.

Motor club AAA reported a national average retail price of $2.96 for a gallon of regular unleaded on Wednesday, just a fraction lower than the previous day, but still higher than this time last week by a couple cents.

The price for gas was rising steadily as the price for Brent crude oil, the global benchmark and a peg for retail gasoline, hit $80 per barrel in mid May, a four-year high. Last week, however, members of the Organization of Petroleum Exporting Countries hinted at putting more oil on the market for the second half of the year to help make up for potential losses from Iran and the steady production declines in Venezuela, one of the top oil exporters to the United States.

The price for Brent by Wednesday morning EDT was closer to $76 per barrel and gas prices are starting to follow suit, trends AAA said were attributable to OPEC's announcement.

"This is welcome news to motorists who have not only seen pump prices increase, on average, 16-cents since the beginning of May, but are paying the highest prices to fill up since 2014," AAA spokeswoman Jeanette Casselano stated.

The national average price for gas has been more or less stable over the last week. Three more states, meanwhile, joined the $3 per gallon club, bringing the total closer to two dozen.

For Patrick DeHaan, the lead petroleum analyst at GasBuddy, the market could be at a short-term peak, leaving the $3 per gallon ceiling out of the picture for now as a national average.

"I can confidently say that gas prices will be moving lower this week and perhaps into next week, so long as nothing comes out of left field to derail the plummet in oil prices," he said in a separate statement.

The decline in gas prices, he added, will be slow.

By market, AAA finds the West Coast remains the most expensive market in the country, with every state in the region posting an average price above the $3 per gallon mark. California is the most expensive state in the country with a state average of $3.74 per gallon, thanks in part to fuel taxes.

Regional inventories of gasoline are in a surplus compared with last year, suggesting it's largely the price of oil that's keeping consumer fuel prices elevated.

The Great Lakes market, meanwhile, is the most volatile with Michigan taking national honors with a 10 cent spike in gas prices over the last week. Gasoline inventories in that region are at their lowest level for the year.

Nationally, commodity pricing group S&P Global Platts said survey results reveal expectations of another decline in gasoline inventories across the board.

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