Gasoline prices rise as oil production cuts take their toll

July 14 (UPI) -- Gasoline prices in the U.S. economy are finally starting to follow trends in oil, where markets are rallying on supply-side concerns stemming from OPEC production cuts, data show.

Travel club AAA listed a national average retail price of $3.66 per gallon on Friday, a penny higher than Thursday and three cents higher than this time last week. Up until this week, the price at the pump has been relatively steady.

Much of the shift in momentum has to do with the price of oil, which has rallied in response to production cuts from Saudi Arabia and Russia. Conflict in Libya, meanwhile, is curtailing even more output.

"Oil is trading relatively flat today but has made tremendous gains over the last couple of weeks and could still add to that over the coming sessions," Craig Erlam, a market analyst for the brokerage OANDA, said in a report. "The price has risen more than 13% from the lows on 28 June and, despite appearing to struggle at times yesterday, still has plenty of momentum."

The price of crude oil influences the bulk of what consumers see at the pump. A monthly market report from the Energy Information Administration, the statistical arm of the Energy Department, put the price for Brent crude oil, the global benchmark, at $84 per barrel next year.

Brent was trading at around $81 per barrel early Friday.

Retail gasoline prices, however, remain well below year-ago levels and show no signs of spiking to $5 per gallon, as was the case last June. The price at the pump this time last year was $4.60 per gallon.

EIA in its monthly market report estimated retail gasoline prices would average $3.40 this year and even with a forecast for higher crude oil prices, gasoline prices could drop to $3.34 if the government's forecast is accurate.

Gasoline prices averaged $3.97 per gallon last year. Brent averaged $101 per barrel because of the loss of Russian oil due to war-related sanctions.