On November 9th, the Energy Information Administration (EIA) released its weekly data on retail gasoline and diesel prices in the United States. Diesel prices rose by 1.1 cents per gallon, while gasoline prices fell by 1.6 cents per gallon. The average retail price for gasoline was $2.096 per gallon, while the average price for diesel was $2.383 per gallon. Despite the ongoing surge in daily COVID-19 infections, demand for fuel is expected to decrease in the coming year. Although it has not yet returned to pre-pandemic levels, demand has been gradually recovering after the severe demand destruction caused by the COVID-19 pandemic. Additionally, the stock and oil markets experienced a reversal after the election of President-elect Joe Biden and Vice President-elect Kamala Harris. The Dow Jones Industrial Average collapsed by 1183 points during the week of November 2nd to November 6th, but then soared by 1398 points on November 9th, following the successful late-stage study results of a coronavirus vaccine developed by BioNTech and Pfizer.
The Energy Information Administration (EIA) publishes weekly data on the supply of gasoline as a proxy for demand. These data show that gasoline demand has been fluctuating over recent weeks. During the most recent week ending in October, the supplied product averaged 8,896 thousand barrels per day (kbpd), rising to a range of 8,400-8,900 kbpd. However, demand jumped to 9,161 kbpd during the week ending in August, before retreating to 8,617 kbpd during the week ending in July. Demand then recovered to 8,809 kbpd during the week ending in July. It has never regained the apparent level of 13,000 kbpd it reached in March, but has cycled up and down since then. The lowest point of demand was reached in the four weeks ending in April, when it hit a huge low of 4,631 kbpd, before increasing to 5,065 kbpd by the week ending in March.
Since mid-June, demand for diesel and gasoline has remained stagnant at approximately 90% of pre-pandemic levels. The supply of diesel products decreased to 3,762 kbpd in the week ending October 30, marking a return to the low levels seen during the weeks ending April 10 and September 11. Demand for fuel oil distillates has fluctuated, reaching a low of 2,809 kbpd in early September and late August before strongly rising to 3,958 kbpd in the week ending August 21. Between the weeks ending April 10 and March 13, demand for oil fuel distillates plummeted from 4,013 kbpd to 1,256 kbpd, as reported by the EIA. However, demand began to recover as the COVID-19 response progressed. It is a concern that demand may not fully recover within this calendar year.
For the week ended November 9, retail prices for gasoline fell by 1.6 cents/gallon. Retail prices for diesel rose by 1.1 cents/gallon.
Gasoline prices have experienced significant decreases compared to last year, resulting in price declines. The previous year’s level was only slightly higher by 0.001 cent/gallon compared to retail gasoline prices during the week ending March 2. From late-November to early March, gasoline prices had been higher than their levels from the previous year. Currently, prices in four out of the five PADDs have returned to the $2/gallon mark. The decline in gasoline prices below $2/gallon can be attributed to the impact of the COVID-19 pandemic. In February, retail prices for gasoline were higher compared to the previous year. The price for the same week one year ago was 51.9 cents/gallon lower than the current price. The national average price for gasoline stood at $2.096/gallon.
The cost during the identical week in the previous year, which was lesser compared to the cost during the identical week in the previous year, had an average of $2.383 per gallon, marking a decrease of 69.0 cents per gallon for diesel on a nationwide scale. Currently, these levels are significantly lower, although diesel prices had been exceeding last year’s levels.
Futures Prices and Retail Price Outlook
They are located in the proximity of a barrel priced between $41-$40, and the prices of WTI crude futures are continuing to rise as of Tuesday in November. After slumping to $35.79 per barrel, reaching its lowest level in approximately five months, it closed at the end of the prior week. Oil prices rebounded to $37.14 per barrel, a increase of $3.30 per barrel or 9.4%, during the week of November 2 to November 6 for WTI Intermediate Texas West crude futures.
During the week of November 6th to November 2nd, the prices of gasoline futures increased by 9.25 cents per gallon (9.1%.) The prices of diesel futures skyrocketed by 9.35 cents per gallon (8.7%.) It is probable that retail prices will also rise this week, although there is no direct correlation between immediate retail prices and futures prices.
Retail Diesel Prices
During the corresponding week last year, the average national price for that week was 69.0 cents/gallon lower than its previous level. Prices increased in all PADDs, resulting in an average price of $2.383/gallon and a retail price increase of 1.1 cents per gallon for diesel. The week concluded on November 9th.
Until the end of February 2020, they remained above the $3 mark per gallon, and during that time, they rose. Looking back to the autumn of 2019, diesel retail prices had fallen below the $3 mark per gallon due to the attacks on Saudi Arabian oil facilities in mid-September. Recently, prices have been declining, but in July and June, the downward trend flattened. Diesel prices have fallen by a cumulative 69.6 cents per gallon to date, marking a significant downward slump for the year.
The average cost of diesel in the East Coast PADD 1 area increased by 0.6 cents to reach $2.450 per gallon. Prices in New England slightly decreased to an average of $2.554 per gallon, dropping by 0.2 cents. Similarly, Central Atlantic prices eased by 0.1 cents, averaging at $2.645 per gallon. On the other hand, Lower Atlantic prices rose by 1.2 cents, reaching an average of $2.296 per gallon. In comparison to the same week last year, PADD 1 prices were 60.0 cents per gallon lower.
The prices in PADD 1 and PADD 4 fell below the $3/gallon mark. Prices subsequently fell below $3/gallon. On June 17, 2019, prices fell below $3/gallon during the week, with 3 PADD joining 2 PADD. Prices were 70.1 cents below their level for the same week last year. Diesel prices rose by 1.5 cents to an average of $2.261/gallon in the Midwest market, specifically in PADD 2.
In the same week of the previous year, prices were 66.3 cents below their level. Currently, the average price in the U.S. Is 25.1 cents below, and among the PADDs, diesel prices continue to be the lowest. Retail diesel prices on the Gulf Coast in PADD 3 edged up by 0.1 cents, reaching an average of $2.132 per gallon.
In the prior year, prices for diesel in the Rocky Mountains region, specifically in PADD 4, experienced the largest increase among all regions. The average price per gallon rose significantly by 4.8 cents, reaching $2.372.
Last year, the cost of diesel in California was 77.7 cents less than it was during the same week. During June and July of 2020, prices in California started to increase again, surpassing $4 per gallon in the first three weeks of November. From July to October, prices in California dropped below $4 per gallon. Until the week ending on June 24, 2019, California was the only major market where diesel prices exceeded $4 per gallon for nine weeks. The average price of diesel in California rose by 0.6 cents, reaching $3.237 per gallon. Prices in PADD 5, excluding California, increased by 3.1 cents on average, reaching $2.572 per gallon. The national average price is now significantly lower than it was last year, with prices experiencing a significant decline. Prices continued to rise in all other PADDs after December 2019. Prior to December 2019, PADD 5 was the only region where diesel prices were higher than the previous year’s same week. PADD 5 prices were 82.1 cents lower than last year’s level. In the West Coast PADD 5 market, the retail price of diesel increased by 1.7 cents, averaging at $2.937 per gallon.
Retail Gasoline Prices
Gasoline prices have fallen in the last week of week eight. During the current week, prices have trended down, with a recent decline of 1.6 cents. Unfortunately, as the economy began to reopen in a phased manner, demand for gasoline rose, causing prices to increase. Prior to June 8th, the average retail price for gasoline had been below $2 per gallon for over four years. However, in early June, prices finally started to climb back up, after remaining at low levels in May and April. Throughout the month of April, gasoline prices remained below $2 per gallon. The COVID-19 pandemic continues to have a huge impact on the U.S. Gasoline market.
The price of gasoline dropped significantly, leading to a decrease in the overall cost. Prices for gasoline in all PADDs exceeded the levels of the previous year. Gasoline prices remained below the levels of the previous year until November. The current prices of gasoline are 51.9 cents lower per gallon compared to the same week last year. Retail gasoline prices fell in all PADDs. The average retail price of gasoline fell by 1.6 cents to $2.096 per gallon during the current week, ending in November.
The pandemic, along with the conclusion of the summer driving season, resulted in another decrease in prices during the months of September and October. In mid-August, prices began to change direction and stabilized, leading to a slight reduction in prices in the latter half of July. However, due to the COVID-19 pandemic, prices experienced a significant drop. Subsequently, prices rose again and reversed the previous downward trend that ended the week of July 1. In May and June of 2019, there was a slight decrease in prices, amounting to a decrease of 23.3 cents per gallon. Prices came very close to reaching the highest point they had reached in early October 2018. Over the next 17 weeks, prices gradually increased by 66 cents per gallon after consistently declining for 14 consecutive weeks, resulting in a total decrease of 66.6 cents per gallon. When examining historical prices, gasoline prices reached a peak of $2.903 per gallon during the week ending on October 8, 2018.
Gasoline prices at retail locations on the East Coast PADD 1 decreased by 2.3 cents and reached an average of $2.047 per gallon for the week ending on November 9. The current week’s average price was 42.7 cents lower compared to the same week last year. In the PADD 1 region, New England prices remained the same, with an average of $2.084 per gallon. Market prices in the Central Atlantic area decreased by 2.0 cents, averaging at $2.223 per gallon. Prices in the Lower Atlantic market experienced a drop of 3.0 cents, averaging at $1.929 per gallon.
The median gasoline costs in the Midwest PADD 2 region were $1.968 per gallon, moderately decreasing by 0.1 cent. In the previous week, PADD 2 joined PADD 3 in encountering gasoline prices under $2 per gallon. Prices in PADD 2 for the week were 46.8 cents per gallon lower in comparison to the corresponding week in the previous year.
Prices for the same week in the previous year were 51.4 cents/gallon less than PADD 3 prices for that week. Among the PADDs, PADD 3 typically has the most affordable average prices. PADD 2 recently became the second PADD, after PADD 3, to have prices below $2/gallon. After PADD 4, followed by PADD 1, and then PADD 2, PADD 3 was subsequently added. PADD 3 was the first to have retail prices below $2/gallon, during the week ending on March 16. The biggest decrease in prices among the PADDs was in the Gulf Coast PADD 3 market, with an average of $1.748/gallon for gasoline prices.
During the previous year at this exact period, PADD 4 costs experienced a decrease of 61.8 cents per gallon. The average price for gasoline at the pump in the Rocky Mountains market was $2.201 per gallon, showing a decrease of 1.5 cents.
Last year, the retail prices of gasoline in California were 89.2 cents per gallon lower compared to the same week. Some counties reversed their decision to reopen and there was a resurgence in COVID-19 cases. In May, the state started reopening businesses and facilities, but this led to a significant decrease in fuel demand. This measure impacted around 40 million individuals, and on Thursday March 19, California took a bold step by implementing a statewide shelter-in-place order to combat the spread of COVID-19. California was the final state where gasoline prices remained above $3 per gallon, but this changed by the end of the week on March 30. During the current week, California prices dropped by 0.4 cents on average to reach $3.029 per gallon. Excluding California, prices decreased by 0.9 cents to average $2.460 per gallon. This week’s prices were 82.6 cents per gallon lower than the prices from the previous year. PADD 5 is typically known for having the highest retail prices for gasoline, and until mid-March, it was the only PADD where retail gasoline prices stayed above $3 per gallon. In the West Coast PADD 5 market, retail gasoline prices fell by 0.7 cents to average $2.765 per gallon.