Fuel Prices Have Hit Bottom, Likely to Rise Over Next Few Weeks
SOUTH PORTLAND, ME – In a new report from Wright Express (WEX), the company said fuel prices are as low as they’re going to get and are likely to rise in the coming weeks. The company said experts believe that despite current economic woes and reduced demand, fuel prices will remain strong for the rest of the year.
Retail gasoline prices dropped more than 25 cents during the month of September, but WEX said some experts believe prices have hit bottom. Last week, wholesale gasoline prices were at $2.50-$2.70 per gallon, but the week ended with some markets back above $3.00 per gallon.
The price of crude oil wasn’t as volatile, falling to a new low in 2011, but then recovering to $82.60 per barrel. WEX said every U.S. wholesale spot market traded well over NYMEX futures’ quotes. The biggest price swings happened on the coasts.
WEX reported that refinery work in the Pacific Northwest sent wholesale prices in that market to $3.16 per gallon. Prices in California exceeded $3.05 per gallon wholesale. East Coast wholesale prices rose above $2.80 per gallon after 72 hours below $2.60 per gallon.
Midwestern wholesale prices are cheaper than elsewhere. Chicago gas trading is just above $2.68 per gallon. WEX said several Midwestern states saw retail quotes of less than $3.00 per gallon, but those numbers were below cost and are expected to increase.
In terms of the overall supply situation, the EIA reported that U.S. gasoline imports were 505,000 barrels per day last week. WEX said this is the single lightest week of imported fuel contributions to the U.S. gasoline supply since late 2001.
ConocoPhillips experienced a shutdown of its Trainer, Pa. refinery, which means a loss of 180,000 barrels per day. WEX said this means tighter fuel supplies on the East Coast.
West Coast gasoline stocks are 2.8 million barrels below the same time last year, and refinery work is scheduled to begin, which could affect markets in that region in late October. Still, West Cost refinery production is currently roughly 283,000 barrels per day higher than last year, WEX stated.
The current tight supply situation, combined with upcoming refinery work and rising wholesale prices, leads WEX to believe fuel prices will remain high during the rest of 2011.