Crude oil prices hit 4-year low amid OPEC disagreement and coronavirus concerns
March 11, 2020 - The national gas price average is cheaper on the week (-5 cents), month (-5 cents) and year (-9 cents) – giving the vast majority of motorists savings at the pump. At $2.38, the national gas price average has not been this cheap since last February.
“For the third week, U.S. gasoline stocks decreased while demand increased. Generally, growing demand amid declining stocks causes increases at the pump, but crude oil prices have dipped to four-year lows, signaling spring could be cheaper at the pump,” said Jeanette Casselano, AAA spokesperson.
When the global markets opened on Sunday evening, West Texas Intermediate (WTI) crude oil prices dipped below $30/bbl for the first time since 2016. The market plunge is in response to a lack of agreement between Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC countries to cut production. The trend of pump prices facing downward pressure is likely to continue through the end of the winter driving season if crude remains cheap, especially amid concerns about the coronavirus.
- The nation’s top 10 largest weekly price decreases are: Indiana (-12 cents), Michigan (-11 cents), Illinois (-11 cents), Delaware (-8 cents), Iowa (-7 cents), Florida (-7 cents), South Carolina (-7 cents), Oklahoma (-7 cents), Wisconsin (-6 cents) and Missouri (-6 cents).
- The nation’s top 10 least expensive markets are: Texas ($2.06), Mississippi ($2.07), Oklahoma ($2.07), South Carolina ($2.09), Louisiana ($2.10), Missouri ($2.10), Alabama ($2.11), Arkansas ($2.13), Kansas ($2.14) and Tennessee ($2.16).
The majority of pump prices across the West Coast region continue to drop, consistent with end of winter driving season trends and cheaper crude prices. When compared to a week ago, California (-3 cents) and Arizona (-3 cents) saw the largest declines, while Alaska (+1 cent) saw the only increase. Hawaii ($3.54) and California ($3.44) remain the most expensive markets in the country. Washington ($3.08), Oregon ($2.97), Alaska ($2.93), Nevada ($2.87) and Arizona ($2.72) follow.
According to Energy Information Administration’s (EIA) latest weekly report, total gas stocks in the region increased slightly from 31.23 million bbl to 31.41 million bbl, which is 1.36 million bbl lower than the level at this time in 2019. Pump prices are likely to continue decreasing this week, barring any supply challenges.
Great Lakes and Central States
All Great Lakes and Central states have cheaper gas prices on the week, month and year except for Missouri and Kentucky, whose month-over-month difference is more expensive by three cents and a penny, respectively.
On the week, gas prices are cheaper across the entire region by as much as 12 cents. These six states land on the top 10 list for largest weekly declines in the country: Indiana (-12 cents), Michigan (-11 cents), Illinois (-11 cents), Iowa (-7 cents), Wisconsin (-6 cents) and Missouri (-6 cents).
With a 1 million bbl build, stock levels bump up to 60 million bbl for the region. This increase helped to push gas prices cheaper on the week. Given the lower price of crude oil, prices are likely to push cheaper in the week ahead.
South and Southeast
Every state in the South and Southeast is touting an average that is cheaper on the week, month and year. Florida ($2.27) lands on the top 10 list for largest weekly (-7 cents), monthly (-12 cents) and yearly (-19 cents) differences.
On the week, gas prices are four to seven cents cheaper across the region. Texas ($2.06) has the cheapest average in the region and the nation. Gas can be found for $2/gallon or less at 24% of gas stations throughout the 11 South and Southeast region states. Oklahoma (51%) and Texas (47%) have the highest percentage of gas stations selling gas for less than $2/gallon.
Regional stock levels have steadily declined for a number of weeks. The latest draw of 3.8 million bbl in EIA’s report drops total regional levels to 87.7 million bbl. Stock builds in the beginning of the year set new records for the region. So while the latest stock decline is a very substantial number, gas prices were able to push cheaper due to higher year-over-year stock levels and cheaper crude oil prices.
Mid-Atlantic and Northeast
Motorists in the Mid-Atlantic and Northeast are paying gas prices that are cheaper on the week, but some state averages are more expensive compared to last month and last year at this time. On the week, prices range between two to eight cents cheaper. On the month, only Delaware (+7 cents) and Maryland (+2 cent) pump prices are more expensive. Some states in the region are seeing a month-over-month savings of as much as nine cents. Compared to March 2019, pump prices are as much as 17 cents cheaper. However, two states in the region have more expensive year-over-year averages including: Vermont (+8 cents) and Rhode Island (+1 cents).
At the start of the work week, state averages range between $2.16 in Virginia to $2.57 in Pennsylvania.
Regional refinery utilization has decreased for three weeks, now down to 56%. Stocks are also in decline-mode, with the latest EIA draw reported as 1.6 million down to 63.5 million bbl. Typically, with decreasing utilization and stock levels in a region gas prices increase. However, cheaper crude oil prices amid growing concerns of the coronavirus has helped to push pump prices less expensive.
Utah ($2.50) and Idaho ($2.55) gas prices are three cents more expensive on the week and two of only three states in the country where pump prices increased on the week. These two states, along with all states in the Rockies region, have more expensive year-over-year prices: Utah (+26 cents), Idaho (+21 cents), Wyoming (+15 cents), Montana (+6 cents) and Colorado (+3 cents). However, on the month gas prices are cheaper across the region. Colorado (-20 cents), Wyoming (-10 cents) and Montana (-8 cents) all land on the top 10 list for largest monthly changes in the country.
Stocks declined in the region by 120,000 bbls, according to EIA’s latest report, pushing total regional stock levels to 9.2 million bbl total. The decline in stocks should not impact gas prices even with regional refinery utilization down 4% to 88%. Nationally, gas prices are mostly pushing less expensive due to cheaper crude oil prices.
Oil Market Dynamics
At the close of Friday’s formal trading session on the NYMEX, WTI decreased by $4.62 to settle at $41.28. Crude prices plunged at the end of last week after OPEC and other major crude producers, including Russia, failed to set a new production reduction agreement amid mounting global crude demand concerns caused by COVID-19. The rapid decline in crude prices has increased market concerns that an oil price war may breakout this week between major crude producers, contributing to further economic troubles worldwide as crude prices continue to drop dramatically. Moreover, the market continues to worry that the impact of COVID-19 will lead to a reduction in global economic growth and global travel, with crude demand expected to decrease. Until it appears that the international public health threat from the virus decreases, crude prices are likely to continue facing significant downward pressure.
Motorists can find current gas prices along their route with the free AAA Mobile app for iPhone, iPad and Android. The app can also be used to map a route, find discounts, book a hotel and access AAA roadside assistance. Learn more at AAA.com/mobile.