The latest data from the U.S. Energy Information Administration (EIA) showed that the average cost for Regular gasoline in America rose over the past week to $2.23 per gallon. That was the first weekly increase in a month but still left the price consumers are paying at the pump roughly 7 percent below the 2016-to-date high of $2.40 per gallon hit in June. Regionally, the cheapest gas in the country can be found in Oklahoma, where a gallon of Regular costs just $1.89 on average. Residents of California as usual have to pay the most in the continental U.S. for Regular ($2.80/gallon), and San Francisco is again the city with the nation’s highest average price ($2.90/gallon).
One of the main reasons gasoline remains relatively cheap for Americans is because the price of oil has rolled over recently following the failure of OPEC members to reach a consensus on production cuts. Indeed, after spiking to over $50 per barrel, West Texas Intermediate (WTI) crude has plunged by more than 10 percent in the past few weeks as “concerns about the deal have grown amid disputes among OPEC members about their current production baselines and willingness to freeze or cut production in 2017,” according to Reuters. During this same period, hedge funds and other money managers have slashed their bullish bets on oil (net long positions in crude futures and options) by 72 million barrels. Oil prices are falling again this morning due in part to President-elect Donald Trump’s earlier comments supporting a boost to U.S. domestic energy production, which would add more supply to the global market. Giovanni Staunovo, an analyst at UBS in Zurich, added that “Even though the oil market is rebalancing, the political uncertainty in the short-term leaves oil prices vulnerable to the downside, that makes it more urgent for OPEC to act.”
Sources: U.S. EIA, DShort, GasBuddy, Bloomberg, Twitter, Reuters, CME, ICE, CFTC
Post author: Charles CouchDisclosures