The price of retail gasoline has fallen since late February when it reached a 2013 high of $3.78 per gallon and this trend is expected to continue through November. EIA projects slight upward movement in May to $3.69/gallon at the advent of the summer driving season, but this increase should be short-lived and the summer of 2013 is expected to closely resemble summer 2012.
For six straight weeks we have observed falling prices for gasoline and diesel. While the gasoline crack spread is the major driver of seasonality in the retail gasoline price forecast, crude oil prices remain the largest source of uncertainty for gasoline price levels this summer. Brent crude oil prices averaged $112.51 per barrel in first-quarter 2013. Despite declining to as low as $104 per barrel on April 5, Brent prices are expected to average $108 per barrel and $107 per barrel in the second and third quarters, respectively.
Increased refinery capacity and pipeline improvements will help keep a lid on pricing as we move forward. As refinery runs increase from the second quarter to the third quarter, wholesale gasoline prices are expected to fall about 8 cents per gallon, pushing crack spreads down to a third-quarter average of 35 cents per gallon.
The Current national gasoline supply is a comfortable 1 million barrels above the same time last year and additions to gasoline inventories will also limit upside action.
Crude Oil --
May 13 WTI crude currently at $93.60 after opening today at $94.56. The contract moved sideways until noon when it fell off to its daytime low of $93.15 before moving a few dimes higher. Crude added 0.3 million barrels to the national supply to arrive at 388.9 million barrels -- 23.7 million barrels above the same time last year.
The U.S. average retail price of regular gasoline decreased four cents from the previous week to $3.608 per gallon, down 33 cents from last year at this time. The U.S. average price has declined 18 cents over the last six weeks.
The national average diesel fuel price decreased one and a half cents to $3.977 per gallon, 17 cents lower than last year at this time. The U.S. average highway diesel price has decreased 18 cents over the last six weeks.
Farm Diesel moved $0.02 lower in the Inputs Monitor Regional Index to $3.53.
According to EIA, U.S. propane stocks gained 0.3 million barrels to end at 40.0 million barrels last week, and are 5.4 million barrels (11.9 percent) lower than the same period a year ago. Midwest regional inventories increased by 0.6 million barrels, while Rocky Mountain/West Coast inventories rose by 0.1 million barrels. Gulf Coast inventories dropped by 0.3 million barrels, and East Coast stocks declined by 0.1 million barrels.
Propylene non-fuel-use inventories represented 8.9 percent of total propane inventories.
LP $0.001 higher to $1.496/gallon on the farm according to Inputs Monitor data.
The national distillate supply fell just 0.2 million barrels to 112.8 mmbbl -- 19.1 million barrels below year-ago levels. The delay in the spring warm-up has been a concern as heating oil spoke up for more of the distillate supply than was expected. A winter weather system has wreaked havoc in the meantime and i expect next week's report to show stronger declines in the distillate supply.
As I am writing this, I am reaching for the thermostat myself to turn up the heat in my South Bend, Indiana hotel room where I am on assignment. By the look of things outside my 8th floor window, I doubt I'm the only one...c'mon spring.