According to data tracked by the Energy Information Administration (EIA), the national average price for both diesel and gasoline declined this week, along with parallel dips in regional fuel prices, though in several areas of the country pump prices for gasoline went up.
The national average price for diesel declined 2.3 cents this week to $3.063 per gallon, which is 49.8 cents per gallon higher when compared to the same week in 2017, EIA noted.
Diesel prices declined in every region of the country, dropping the most on the West Coast without including California (down 3.7 cents to $3.107 per gallon) and New England (down 3.4 cents to $3.154 per gallon). Yet diesel remains above the $3 per gallon mark except in three U.S. regions:
- The Lower Atlantic: down 2.2 cents to $2.966 per gallon
- The Gulf Coast: down 2.3 cents to $2.851 per gallon
- The Rocky Mountains: down 9/10ths of a penny to $2.972 per gallon
The national average price for gasoline dipped three cents this week to $2.607 per gallon, though that is 30 cents per gallon higher compared to the same week in 2017, EIA noted.
Gasoline prices declined in every region of the country except in three of them: New England (up 3/10ths of a penny to $2.641 per gallon), the Rocky Mountains (up 1.4 cents to $2.510 per gallon) and the West Coast with California excluded (up 1.2 cents to $2.768 per gallon).
According to EIA, the main “component” of fuel prices is the cost per barrel of oil – and the agency now believes an increase in oil prices will occur this year.
EIA’s February Short-Term Energy Outlook (STEO) raised the forecast for crude oil prices in 2018 by nearly $3 per barrel (b) compared with the previous STEO as average monthly Brent prices have increased for seven consecutive months, and, on January 11, spot prices moved higher than $70/b for the first time since December 2014.
The agency now also believes Brent spot prices will average about $62/b in both 2018 and 2019, compared with an average of $54/b in 2017, with West Texas Intermediate (WTI) crude oil prices to average $4/b lower than Brent prices in both 2018 and 2019.
The upward revision to 2018 prices results in higher U.S. crude oil production throughout the forecast, EIA noted, though with relatively little production growth from members of the Organization of the Petroleum Exporting Countries (OPEC) and higher global consumption, the global oil balances remain largely unchanged from the forecast last month.
Crude oil prices have increased over the past seven months as oil inventories, both in the U.S. and globally, have fallen steadily. In January, oil prices may have received some support following the OPEC monitoring committee meeting, where some oil ministers suggested extending the production cut agreement in some form beyond the currently scheduled expiration at the end of 2018, the agency added.
Rapid declines in Venezuelan crude oil output are also likely contributing to higher crude oil prices. Average U.S. imports of crude oil from Venezuela declined to less than 0.4 million barrels per day (b/d) for the four weeks ending January 26, approaching the lowest level in decades.
EIA estimates that U.S. crude oil production averaged 10.2 million b/d in January 2018, up 100,000 b/d from December 2017. EIA estimates that total U.S. crude oil production averaged 9.3 million b/d in 2017 and will average 10.6 million b/d in 2018, which would mark the highest annual average U.S. crude oil production level, surpassing the previous record of 9.6 million b/d set in 1970. EIA forecasts that 2019 crude oil production will average 11.2 million b/d.
OPEC total liquids production is expected to grow modestly through the forecast period, averaging 39.4 million b/d in 2018 and 39.9 million b/d in 2019. As a result, EIA estimates that global inventories will build by 0.2 million b/d in both 2018 and 2019, indicating that global markets are largely in balance.