CAMARILLO, Calif. -- U.S. retail gasoline prices increased 6.5 cents per gallon on average on the past two weeks, to $2.8135, according to the most recent Lundberg Survey of approximately 7,000 U.S. gas stations. It is the first rise since early July. And it comes from crude. During the same two weeks, the U.S. benchmark grade gained $5.61 per barrel, which simplistically means 13 cents per gallon on gasoline. WTI near-month closed at $76.70 per barrel this past Friday.
Crude gained from world [image-nocss] oil demand against little change in oil supply and cheered by U.S. economic growth. At the same time, crude oil traders see that the Organization of Petroleum Exporting Countries (OPEC) is not about to increase oil production at a time when world demand for oil rises seasonally, with colder temperatures bringing on the heating oil season.
For OPEC to meet on 9/11 for the second year in a row cannot help but underscore, for those who notice the date, the hard-line profile the organization is presenting to the world.
Going forward, gasoline price stability is more likely than big drops or big hikes: At this time of year, post-summer demand ebbs and refiners replace higher-cost summer blends with lower-cost winter formulations; simultaneously, refining capacity usage suffers some down time in the second, but smaller, seasonal maintenance period used to gear up for heating oil output. That is, unless crude oil prices surge again. If they do, gasoline prices will follow.
An extreme and early cold weather snap would support even higher oil prices, as could increased nervous tension in oil trading circles because there are now five OPEC members who are in negative headlines: Iran, Iraq, Nigeria, Venezuela, and in the past three days of terrorist attacks, Algeria.
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