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OIL AND GAS
U.S. gasoline prices take unexpected rise
by Daniel J. Graeber
Washington (UPI) Jun 16, 2015


Crude oil mixed on U.S. storm and supply data
New York (UPI) Jun 16, 2015 - Crude oil prices were mixed Tuesday, with the U.S. index rising in response to a storm in the Gulf of Mexico and Brent moving down on supply issues.

British energy company BP said operations are normal in the Gulf of Mexico, though others in the region have pulled some staff from the area amid threats from Tropical Storm Bill.

The National Hurricane Center in Miami, Fla., said Bill was moving northwest at about 13 miles per hour and was on track to hit the Texas coast by Tuesday morning.

The U.S. Energy Information Administration estimates the Gulf of Mexico accounts for about 17 percent of total U.S. oil production. About half of the total production in the Gulf of Mexico was cut in 2005, which at the time was around 846,000 barrels per day, in the aftermath of Hurricane Katrina.

West Texas Intermediate, the U.S. benchmark for crude oil, moved up a fraction of a percent in early Tuesday trading to $59.68 per barrel, ending three straight days of declines.

The threat to U.S. offshore oil installations should be over by the end of Tuesday, forecasters said.

"Weakening is forecast after the center moves inland later today, and Bill is expected to weaken to a tropical depression tonight," the National Hurricane Center said.

In the global market, Brent crude oil prices drifted lower for the fourth straight day to lose a fraction of a percent to $63.77 per barrel, down nearly 2 percent from the start of June.

The Organization of Petroleum Exporting Countries last week said its members would keep production levels static despite concerns about a market already overrunning with crude oil. OPEC members said they expected demand would recover during the latter half of 2016.

Media reports from Libya said Tuesday production there is up about 60 percent to 500,000 bpd.

Retail gasoline prices in the United States are making a surprise surge as high demand and ongoing refinery issues crimp supplies, motor club AAA said.

AAA reports a national average retail price for a gallon of regular unleaded gasoline at $2.80 for Tuesday, about six cents higher than last week and 10 cents higher than one month ago.

The motor club in its weekly fuel gauge report said the new high-water mark for 2015 is attributed to a decline in gasoline stocks caused in part by higher fuel demand and "persistent refinery problems, which has limited gasoline production."

Separate analysis from price-watchers at GasBuddy.com found retail gasoline markets in the Midwest were among the hardest hit by refinery issues, with Indiana and Michigan posting the highest weekly gains with an average 27 cent increase per gallon.

GasBuddy finds almost 90 percent of all retail service stations in the country are selling gasoline for more than $2.50 per gallon, up from 81 percent last week. The number of stations posting gas prices above $3.50, however, fell more than a full percentage point to 4.5 percent.

The price-watching website said gasoline prices in the Great Lakes region should pull back as crude oil prices soften for June. AAA said in its report the cost of crude oil is the dominating factor in the price consumers pay for gasoline.

"Saudi Arabia, the world's leading crude exporter, is reportedly prepared to increase its production to meet strong demand, which likely would keep a ceiling on the price of crude," it said. "Domestic production also remains elevated and is expected to remain at or near current levels, despite the reduction in U.S. oil rig counts."

The U.S. Energy Information Administration said in a market report for June it expected retail prices to average $2.44 for full-year 2015 and $2.55 for next year.


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