Crude Oil Hits Lowest Price Since 2009

Demand for gasoline remains strong, signaling the driving season isn’t over yet.

The Week

With only two weeks left until Labor Day, the demand for gasoline is strong and gasoline production is meeting that demand. A report released yesterday by the U.S. Department of Transportation’s (USDOT) Federal Highway Administration (FHWA) show that U.S. driving topped 1.54 trillion miles in the first half of 2015, beating the previous record – 1.5 trillion, set in June 2007.

According to the Energy Information Administration (EIA), the total gasoline production number last week was a record at 10.248 million barrels per day. Today’s national average price of $2.63 per gallon is a decrease of two cents per gallon versus one week ago. The relatively low price of crude remains evident in the significant year-over-year savings at the pump with a yearly savings of 81 cents per gallon versus this same date last year.

CURRENT AND PAST GAS PRICE AVERAGES

Regular Unleaded Gasoline (*indicates record high)

 
08/21/15
Week Ago
Year Ago
National
$2.63 $2.65
$3.44
New Jersey
$2.32
$2.37
$3.27
Trenton
$2.38
$2.44
$3.33
Cape May County
$2.39
$2.43
$3.23
Burlington
$2.24
$2.29
$3.19
Middlesex, Somerset, Hunterdon Counties
$2.31
$2.37
$3.27
Monmouth, Ocean Counties
$2.34
$2.40
$3.28
Crude Oil

$40.25 per barrel

$42.07 per barrel
$93.96 per barrel

Today, crude prices in the US dropped below $40 per barrel for the 1st time since 2009, rebounding slightly to close at $40.25 per barrel.  Market fundamentals continue to support the price of crude moving lower in the near term due to global oversupply. The market is now responding to reports that the Japanese economy is shrinking, which has been viewed as yet another signal that supply will likely outpace demand in the near term.

The Weekend

“The record low price of crude continues to deliver significant year-over-year savings at the pump,” said Tracy E. Noble, Manager of Public and Government Affairs for AAA Mid-Atlantic.  “Motorists should continue to see gas prices decline slightly for the last two weeks of the summer travel season.”

The Week Ahead

The EIA cut its price projection for U.S. benchmark West Texas crude by $6 per barrel for 2015 and $8 per barrel for 2016 from its prior prediction. The EIA now anticipates that WTI crude will average $49 per barrel in 2015 and $54 per barrel in 2016. The more moderate forecasts come from concerns over economic growth in emerging markets, continuing supply growth, increases in global liquids inventories and the possibility of increasing volumes of Iranian crude oil penetrating global markets. The EIA does say, though, that supply growth is slowing down, but that didn't prevent it from reducing the numbers.