Gas Prices Edge Up, But Supplies Keep Lid on Futures

Gasoline pricesThe average price across the country for regular gasoline rose 3 cents to $2.86 from a week ago, but growing U.S. crude stockpiles and still sluggish demand has forced crude oil futures to retreat from a recent high of $87 a barrel.
To the U.S. motorist, there should be some relief that gas prices at the pump will stay on this side of $3 a gallon for regular as a national average, according to the current consensus.
Energy officials last week issued a forecast of $2.92 per gallon on average for regular grade during the summer driving season, which officially ends Sept. 30. The average was $2.44 last summer. Officials will update their forecast next month.
Nonetheless, indications of a more robust economic recovery and a weakening dollar may fuel a retest of the $87 high in coming weeks. A weak dollar makes commodities a more viable investment.
Crude oil for May delivery closed at $84.34 today, falling 58 cents at the end of regular trading on the New York Mercantile Exchange. The lead contract briefly traded above $87 on April 6.
The U.S. Energy Department reported today that California registered the highest price on average for gasoline – $3.10, up 1 cent from a week ago. The lowest average was reported for the Gulf Coast region at $2.75, up 4 cents from a week ago.
The national average of $2.86 was up 81 cents from a year go.
The American Automobile Association reported yesterday that the crude oil markets could not longer ignore the fundamentals of supply and demand. Analysts predict that U.S. Energy officials will announced tomorrow an 11th consecutive weekly gain in U.S. crude supplies, which are near a 17-year high.
“Finally, the basic fundamentals of supply and demand are being acknowledged by investors,” said Jessica Brady, manager, AAA Public Relations. “As crude prices increased throughout the week and reached above $87, investors realized there was too little demand and too much supply to support such a price.”

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