Gasoline Prices Surge in January
A combination of rising consumer demand in America and an increase on the price of crude The rise in oil has led to an augmentation gas prices Pump.
The national average gas price was $3.46 for a regular gallon. on Jan. 24According to the American Automobile Association (AAA) data, it is.
The increase in prices was largely attributed to strong consumer demand and good weather in an economy that is still experiencing high inflation.
“The recent rising temperatures led to rising pump prices,” said Andrew Gross, an AAA spokesperson, “and with the cost of oil hitting $80 a barrel, there is a lot of upward pressure on gas prices at the moment.”
Gas was $0.12 higher from last week’s average price per gallon and a jump from the $3.097 average last month.
Texas, which was until last week the only state with a gas price of less than $3 per gallon, saw its average price rise to $4 this week.
American drivers will see higher gas prices in the coming weeks
AAA observed that motorists are taking advantage the milder winter in the Western United States by heading out on the road.
“Despite the messy West Coast weather, a mild winter elsewhere in the nation may have led to more drivers getting behind the wheel,” AAA said on Jan. 19.
But, it is possible that a severe winter storm, which is expected to strike the South this week, could change all of that. according To the National Weather Service
Most of Missouri is expected to face a winter storm through the morning of Jan. 25, with as much as six inches of snow expected throughout the region.
According to most analysts, although pump prices may reach $4/gallon in the coming year, they are unlikely to rise to $5 per gallon.
Federal government data shows that 2022’s average gasoline price was $3.97/gallon. The forecast for next year is $3.32.
Pump Feels the Spike in Crude Price Rise
The U.S. consumer pump price, which is sensitive to changes in the oil markets, is already being affected by a rise of crude prices.
Western economies will implement an import ban on refined products such as gasoline and diesel from Russia beginning in February. This could lead to another supply-side energy crisis.
American oil refineries are also preparing for a period of seasonal maintenance ahead the shift in March to production of summer gasoline blends. This could reduce production over the coming weeks.
Due to recent storm damage, many refineries in the United States are undergoing additional maintenance. Others overseas are closing down as they delay repairs in order to cash in record amounts.
High gas prices can also be caused by low inventories of refined products, especially middle distillates.
Crack Spread Oil Margins Are Up
The oil refining margins have seen a resurgence in their ability to extract crude oil, as well as the price of gasoline, diesel and other petroleum-based products.
The WTI 3-2-1 crack spread, which is the industry’s refining margin measure, rose to a three-month high of $42.31 a barrel on Jan. 24. Future fuel prices are determined by the refining spread.
Between 1985 and 2021, the WTI 3-2-1 crack spread averaged only $10.50 per barrel. noted Javier Blas, in a Bloomberg opinion column.
Blas stated that the crack spread traded only once for 72 days over the last three decades of data. This was all except the first two days in this week.
As China reopens, Crude Demand Rises again
Brent crude oil, which is the global benchmark for oil prices, has seen a rise of around 3 percent over the past year. It trades close to $90 per barrel, the highest level reported since November. reported UPI.
Much of the surge in oil prices is due to the reopening of China’s economy from its tight pandemic-related lockdown, which is now generating robust demand for more crude.
“The market believes that the reopening of China’s economy, despite high coronavirus infection rates, will help to bolster global crude demand while supporting elevated prices,” AAA.
“For this week, crude prices could continue to climb if ongoing market optimism persists.”
The International Energy Agency forecast that global demand for crude would grow by 1.9 million barrels a day in 2023, partly boosted by China’s reopening.
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