ANBLE Energy Outlook Rising Fuel Costs
ANBLE Energy Outlook Rising Fuel Costs
Anble Letter’s Economic Outlook: Gasoline Prices, Crude Oil Volatility, and Surprisingly Cheap Natural Gas
After holding steady for much of the spring and early summer, gasoline prices are heading higher. The national average price of regular unleaded is up to $3.73 per gallon, a rise of roughly 20 cents from a month ago. Steady demand and rising oil prices have filtered through to the gas station, and it seems likely that pump prices will keep creeping higher in the coming weeks. The national average should stay below $4 unless some sort of supply outage causes a sudden price spike. But local prices in many Western states are already near or over $4. In fact, California is flirting with $5 gas. Diesel, meanwhile, is up to $3.97 on average, a dime higher than a month ago. That’s no bargain, but at least it’s not as expensive as it was a year ago when diesel averaged $5.34.
Crude oil prices continue to trade in a volatile fashion. Not long ago, benchmark West Texas Intermediate crude was hovering a bit below $70 per barrel. But surprisingly resilient global demand for oil and concerns about stockpiles of oil in storage have pushed West Texas Intermediate to nearly $80 a barrel. We look for it to retreat a bit, especially due to the weakness in China’s economy. But crude prices are likely to keep jumping around a lot and may not stay in any one trading range for long.
The biggest surprise in energy markets this year is how cheap U.S. natural gas prices have remained. After soaring to nearly $10 per million British thermal units last year, the benchmark gas futures contract has steadily fallen and is now near $2.60 per MMBtu, despite heavy demand from power plants amid a widespread heatwave. Mild weather over the past winter allowed gas stockpiles to stay unusually high. And now, even with power plants burning lots of gas to keep air conditioners running around the clock, the amount of gas in storage is 24% higher than it was a year ago. If the ongoing heatwave can’t light a fire under gas prices, it seems that nothing will for the time being.
Gasoline Prices on the Rise
Gasoline prices have begun their ascent after remaining steady throughout the spring and early summer. With the national average price of regular unleaded now at $3.73 per gallon, an increase of approximately 20 cents from just a month ago, it’s clear that steady demand and rising oil prices are making their impact felt at the gas station. While it’s expected that the national average will remain below $4 unless an unexpected supply outage occurs, it’s worth noting that local prices in several Western states have already surpassed the $4 mark. California, in particular, is seeing prices flirting with the $5 threshold. On top of that, diesel prices have also risen, reaching an average of $3.97 per gallon, ten cents higher than a month ago. Although it’s hardly a bargain, it’s still comparatively cheaper than a year ago when diesel averaged $5.34.
Crude Oil Volatility
The world of crude oil continues to experience volatility. Not long ago, benchmark West Texas Intermediate crude was hovering below $70 per barrel. However, resilient global demand for oil and concerns regarding stockpiles in storage have propelled West Texas Intermediate close to the $80 per barrel mark. It’s worth noting that this meteoric rise may see some pullback, especially given the weakening state of China’s economy. Nevertheless, crude oil prices are likely to continue fluctuating wildly and may not adhere to any particular trading range for long periods.
- ANBLE’s GDP Outlook Resilient Economy, Impending Slowdown
- VR Race ANBLE Economic Forecasts
- July Fed Rate Hike may be the last.
Surprisingly Cheap Natural Gas
One of the most unexpected developments in energy markets this year has been the consistently low prices of U.S. natural gas. After initially reaching almost $10 per million British thermal units in the previous year, the benchmark gas futures contract has steadily decreased and is now hovering around $2.60 per MMBtu. This is despite significant demand from power plants, especially during the ongoing heatwave. Notably, the mild weather experienced during the past winter allowed gas stockpiles to remain exceptionally high. Consequently, even with the heavy consumption of gas by power plants to maintain continuous air conditioner usage, the current gas storage level is 24% higher than it was at the same time last year. It appears that unless something significant happens, such as a surge in demand due to the heatwave, gas prices are unlikely to rise significantly in the near future.
Related Content – The EV Revolution – Gas Prices Around the World – Who Controls Gas Prices in the U.S.?
Click here for a free issue of The ANBLE Letter or for more information.
