Jan. 08–Decreased demand and bountiful supply has led to the lowest gas prices in two years and AAA expects “minimal volatility” with OPEC’s slated production cuts.
While Missouri boasts the lowest national average at $1.83 a gallon, Arkansas and Oklahoma come in close at around $1.90 each. Drivers at GasBuddy.com reported Monday the Walmart on U.S. 71 South in Fort Smith as having the lowest-priced gas in Arkansas at $1.69 a gallon.
Patrick DeHaan, head of petroleum analysis for GasBuddy.com, predicts this window for cheap gas prices to last until mid-February.
“As the global crude market continues to be oversupplied, oil prices are dropping, continuing last week’s trend,” said Jeanette Casselano, AAA spokesperson. “This is good news for motorists filling up at the pump.”
Casselano goes on to explain that with OPEC production cuts slated to take effect this week, analysts will be watching the price of oil.
“Significant movement toward higher market prices would mean cheaper gas prices could be in the rearview mirror. However, AAA expects to see minimal volatility at the start of the cartel’s production cuts,” Casselano noted.
The latest Energy Information Administration data registers gasoline demand at 8.6 million barrels per day for the week ending Dec. 28 — the lowest level on record since February 2017.
Despite record motor vehicle travel for the holiday, demand was down nearly 900,000 barrels, suggesting that demand this winter could be lower than expected, AAA adds.
Today’s national gas price average is $2.24 and has declined for 12 weeks in a row. The national average is 3-cents cheaper on the week, 20-cents cheaper than last month and 25-cents cheaper year-over-year.
Today, 29 state gas price averages are at or below the national average of $2.25 with Missouri touting the cheapest average at $1.83. Hawaii ($3.34) carries the most expensive average.
The end of 2018 drove WTI crude oil prices to as low as $44 a barrel, which is a steep $31 drop from the high of $77 a barrel seen during June.
The nation’s top 10 least expensive markets according to AAA: Missouri ($1.83), Oklahoma ($1.92), Arkansas ($1.92), Texas ($1.93), South Carolina ($1.93), Ohio ($1.93), Alabama ($1.93), Mississippi ($1.93), Louisiana ($1.94) and Kansas ($1.95).
GasBuddy.com puts the state average for Arkansas at $1.905 and $1.899 for Oklahoma.
Gas prices in the South and Southeast remain among the cheapest in the country, but state averages are declining at a slower rate than most states. On the week, states in the region only saw gas prices drop four or five cents with Florida ($2.15) seeing the sole nickel decline.
Regional refineries are operating at 98 percent of utilization as stocks continue to build. The latest Energy Information Administration report lists total South and Southeast stocks at 85.7 million barrels — the highest on record for 2018 and levels not seen since early March of last year.
AAA noted oil prices were volatile last week, as market observers continued to believe the global crude market is oversupplied. Moreover, analysts were also wary of the impact a potential economic slowdown in 2019 could have on global crude oil demand. In the coming weeks, market observers will look for indications that OPEC’s global pact with large non-OPEC crude producers (including Russia) will reduce crude production by 1.2 million barrels per day for at least the first six months of 2019, which may help reduce the growing global glut of crude. In turn, this could drive up crude oil prices and, subsequently, gas prices.
In related news, EIA’s latest weekly petroleum status report revealed that total domestic crude inventories held steady for the second week at 441.4 million barrels.
Domestic crude production also held steady for a second week at a record high of 11.7 million barrels per day.
“Steady inventories amid high production underscore how oversupplied the market currently is, while demand for gasoline remains at a two-year low,” AAA’s market analysis states.
Baker Hughes, Inc. reported the U.S. lost eight oil rigs last week, bringing the current total of active oil rigs to 877. When compared to the total number of active rigs at this time last year, there are 135 more rigs this year.
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