CAMARILLO, Calif. -- The U.S. average retail regular grade price increased 2.21 cents, to $2.2931, half the rate of the prior two weeks' increase. It is a total of 11 cents rise over six weeks after a crash of 84 cents during the prior 12, according to the most recent Lundberg Survey of approximately 7,000 U.S. gas stations.
Pump price stability, at least compared with most of 2006, is here, at least for now. No severities in crude or gasoline supply or demand are on the near horizon. Gasoline [image-nocss] demand will soon enter its deep trough, as January is our lowest month.
Two cheers for a modest comeback in gasoline demand growth, the cause of the slight uptick in price. The current average retail price sits 73.25 cents under its all-time high back on August 11, encouraging consumption. And three cheers for the oil industry, supplying the seasonal heating oil market after successful seasonal refinery turnaround. OPEC also seems to be a positive for relative price stability. Its production cut for November 1, which currently is only a portion of the pledged cut, is to be followed by another cut for February 1 next year. If less than half of the 1.1-million barrels-per-day cut now in effect is followed by an actual cut of 500,000 bpd in February, it would be approximately a wash.
On Friday December 15, WTI closed on the NYMEX at the exact same level as it did two weeks ago: $63.43 per barrel. Friday's rise over Thursday was more due to foggy weather for Houston's marine deliveries of crude than to OPEC's foggy moves.
Some of the pressure on gasoline retailers has lifted: During these past two weeks, retailers did recover some regular grade margin on average, in all regions and in all but two metro areas surveyed; however, in the majority of markets, retail margin is still less than a dime.
Given current crude, heating oil and gasoline market conditions, any further retail gasoline price increases probably be small. In fact, they might end: In about a quarter of cities surveyed, retail prices slipped between December 1 and December 15.
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