Low supply, high demand pushing up gas prices

July 31 (UPI) -- Basic supply and demand dynamics, coupled with short-term market disruptions, mean U.S. retail gas prices are climbing once again, retail analysts said.

Motor club AAA reported a national average retail price for Tuesday of $2.86 for a gallon of regular unleaded gasoline, up about 3 cents from last week. Jeanette Casselano, a spokeswoman for AAA, said domestic oil and gasoline inventories have declined, leading to higher prices at the pump.

"As crude and gasoline inventories tighten, motorists can expect gas prices to trend higher and remain volatile," she said in a statement.

A report emailed from commodity pricing group S&P Global Platts said export demand for U.S. petroleum products is high because U.S. oil prices are lower than the international benchmark, Brent. That difference, known as the spread, shows a $5.60 per barrel premium for Brent.

Imports, meanwhile, are lower, Platts reported, and gasoline deliveries to the United States are on pace to be at their lowest level for the first week of the month since February.

By region, the West Coast is the most expensive market in the country, though prices have softened somewhat. AAA reported gasoline inventories in the region are about 3.5 million barrels higher than they were at this point last year.

The Great Lakes region, meanwhile, is the most volatile, with most states returning to yearly highs. After an 11 cent per gallon jump in gas prices, Michigan has the highest price at the pump in the region at $3 per gallon on average. AAA reported regional gasoline inventories are at their lowest point for the year.

Separately, Patrick DeHaan, the senior petroleum analyst at GasBuddy, said geopolitical events could drive the price of oil higher, and subsequently influence the retail price of gasoline.

"Indications of continued strong summertime demand for gasoline along with robust fuel export numbers could serve to help sustain moderately higher gas prices, but more geopolitical events, such as the closing of oil ports on the Red Sea, affecting Saudi Arabian crude exports, are sure to provide more upwards momentum for fuel prices in the week ahead," he said in a statement.

Saudi tankers are avoiding a key oil artery in the Red Sea after attacks from the Houthi rebel group in Yemen.