With a AAA-estimated record 43 million drivers hitting the road this Fourth of July holiday weekend, this year continues to see Americans hitting the road in record numbers. A rebounding economy and gas prices across the country that reflect substantial yearly savings are contributing to gasoline demand and vehicle miles traveled that are both on track to set all-time highs for 2016. Higher demand puts upward pressure on prices, as evidenced this spring when prices increased on 84 of 104 days beginning at the end of February and jumped more than 65 cents during this span. As is often the case leading up to the changeover from winter- to summer-blend gasoline, this year’s increase was exacerbated by regional refinery issues that sent prices temporarily higher in some markets. While prices may continue to slide through the month of July, further refinery issues, stronger than anticipated economic growth, geopolitical tensions overseas or hurricanes here at home that impact distribution and production all have the potential to reverse this trend and see prices again turn higher again.
The West Coast continues to post the nation’s highest prices at the pump, led by: California ($2.91), Hawaii ($2.82), Washington ($2.67), Alaska ($2.65) and Nevada ($2.57).
The nation’s least expensive markets are: South Carolina ($1.96), Mississippi ($2.02), Alabama ($2.05), Arkansas ($2.05) and Oklahoma ($2.05).
Drivers on the West Coast continue to pay some of the most expensive prices in the nation, this includes market-leader California, where prices continue to inch back toward the $3 per gallon benchmark. Despite these high prices, drivers many of these same states are enjoying some of the most dramatic year-over-year declines in the country. Alaska (-82 cents) has the highest yearly discount, while Utah (-65 cents) Nevada (-63 cents), Oregon (-61 cents), Idaho (-57 cents) and Hawaii (-55 cents) all register in the top ten.
Oil Market Dynamics
Global oil prices continue to point lower thanks largely to indications of increased supply. This includes the recent return of production from the Canadian Oil Sands and reports of strong output from OPEC member countries. Adding to this news over the weekend were reports that June production by OPEC had reached multi-year highs. This includes an increase in production in Nigeria where production reportedly increase by 150,000 barrels per day during the month. While these recent production reports have pointed to increased production the region remains volatile and an incident with the potential to impact production and send prices higher is always a consideration.
At the close of Friday’s formal trading session on the NYMEX, WTI was up 66 cents to settle at $48.99 per barrel; however, prices were trading sharply lower in pre-market trading this morning.