The Week
As it begins to feel more like winter across the Mid-Atlantic region, pump prices in the Mid-Atlantic have moved higher, attributed most likely to OPEC’s announcement to cut production on Nov. 30. Increases have been most evident over the last week in the Mid-Atlantic: New Jersey (+8 cents) Delaware (+6 cents), Maryland (+6 cents), Pennsylvania (+5 cents), Virginia (+5 cents), and Washington, D.C. (+7 cents). Today’s national average price of $2.20 represents an increase of four cents per gallon compared to one week ago and 18 cents more than the same date last year.

The Organization of Petroleum Exporting Countries (OPEC) elected to cut its collective production when the group met Nov. 30 in an effort to rebalance the global oil supply and raise prices. Markets reacted quickly to the production agreement with crude oil prices rising, leading to increased retail prices. The deal is set to take effect in January 2017.

CURRENT AND PAST GAS PRICE AVERAGES

Regular Unleaded Gasoline (*indicates record high)

 
12/09/16
Week Ago
Year Ago
National
$2.20 $2.16
$2.02
New Jersey
$2.32
$2.24
$1.94
Trenton
$2.34
$2.27
$1.98
Cape May County
$2.29
$2.22
$1.94
Burlington
$2.27
$2.19
$1.89
Middlesex, Somerset, Hunterdon Counties
$2.35
$2.26
$1.95
Monmouth, Ocean Counties
$2.33
$2.25
$1.95
Crude Oil

$51.50 per barrel (12/09/16)

$51.68 per barrel (12/02/16)
$37.16 per barrel (12/09/15)

At the close of Friday’s formal trading session on the NYMEX, West Texas Intermediate (WTI) crude oil closed at $51.50 per barrel. On Wednesday, the Energy Information Administration (EIA) reported U.S. crude oil refinery inputs averaged over 16.4 million barrels per day last week, 134,000 barrels per day more than the previous week’s average. U.S. crude oil imports were up by 755,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged about 8.0 million barrels per day, 5.9% above the same four-week period last year. The EIA forecasts West Texas Intermediate (WTI) crude oil prices to average $51 per barrel in 2017.

The Weekend

“Crude oil prices continue to climb following market reaction to the OPEC agreement,” said Tracy E. Noble, Manager of Public and Government Affairs for AAA Mid-Atlantic. “Time will tell how long the trend of higher oil prices will continue and whether the OPEC agreement is fully carried out in January.”

The Week Ahead

OPEC and non-OPEC members, such as Russia, will meet again in Vienna on December 10 to focus on additional production limits. OPEC’s Nov. 30 announcement to cut production beginning in January was a bid to boost crude oil prices, which had slumped to a 13-year low of $26.21 per barrel on February 11, 2016 to a peak of more than $100 in June of 2014.

Earlier in the week, Bank of America Merrill Lynch (BAML) said that the latest agreement by OPEC to cut production will likely turn the global oil balance into a deficit as early as the first quarter of next year. That would lead prices to start to accelerate and could move crude futures into backwardation.