EIA revises fuel price forecasts for 2017 and 2018
TAMPA, Fla. — Gas prices have held relatively steady for the past two weeks, but now face upward pressure. The national average price for a gallon of regular unleaded is $2.25 – 1-cent less than a week ago, 3 cents more than this time last year, according to AAA, whose data is collected from credit card swipes and direct feeds from 120,000 gas stations nationwide, in cooperation with OPIS and Wright Express.
Visit the AAA Newsroom
“Gas prices could inch a little higher this week,” said Mark Jenkins, spokesman, AAA – The Auto Club Group. “Refineries are running on all cylinders, cutting into excess crude stocks. That helped push oil prices higher last week, which puts upward pressure on prices at the pump. The increase on the retail-side may only amount to as much as 5 cents by the end of the week. While this could be the start of a gradual uptick in gas prices, drivers are likely to continue saving at the pump compared to what they paid earlier this year.”
Oil Prices Reach 11-Day Highs
At the close of Friday’s formal trading session on the NYMEX, WTI was up 46 cents to settle at $46.54. The market has been trending upward slightly after EIA’s weekly report showed that last week, crude oil inventories dropped below 500 million bbl for the first time since late January. Moreover, total inventories of crude are just 4.4 million bbl more than last year, showing that the surplus is draining – albeit rather slowly.
The market will now turn its attention toward OPEC to determine if it will maintain compliance with its agreement to limit production through March 2018 and curtail rising crude production levels from member countries that are exempt from the agreement. In the meantime, drivers are still poised to reap the benefits of the crude glut and continued strong gasoline output rates from refineries.
Gasoline Demand Reaches Milestone
According to the Energy Information Administration’s (EIA) report for the week ending on July 7, gasoline demand did not hit an all-time high last week, but it did reach a “top 5” milestone at 9.786 million b/d. Demand has been consistently strong based on EIA’s measurements for this summer, and for the most part, it is keeping pace with the summer of 2016. The rolling four-week average stands at 9.711 million b/d, which is nearly identical to the average for the summer of 2016 at this time.
EIA Adjusts Fuel Forecasts
- The Energy Information Administration revised its forecast for crude oil prices to average $49/b in 2017 and $50/b in 2018, down $2/b and $4/b from the previous forecast.
- U.S. crude oil production averaged an estimated 8.9 million barrels per day (b/d) in 2016 and is forecast to average 9.3 million b/d in 2017. EIA forecasts production to average 9.9 million b/d in 2018, which would mark the highest annual average production in U.S. history, surpassing the previous record of 9.6 million b/d set in 1970.
- The EIA also forecasts U.S. regular gasoline retail prices will average $2.32/gal in 2017 and $2.33/gal in 2018.