CAMARILLO, Calif. — The global oversupply of oil has lasted years, and it persists. So has the oversupply of U.S. gasoline. The global and U.S. economies were not enjoying robust health even prior to COVID-19, and now recession plagues the petroleum market.
The U.S. average retail price of regular grade gasoline climbed 10.77 cents per gallon (CPG) in the past two weeks, to $2.1583, according to the most recent Lundberg Survey of U.S. fuel markets. It's a larger hike than in the prior two-week period, due in large part to what crude oil prices were doing. But now oil is rethinking its track.
This makes a total retail gasoline price increase of 23.12 cents since the bottom point seven weeks ago—a sizeable increase, but motorists still have on average a discount of 68.10 cents under what we paid one year ago.
And recession—and motorist movement still retrained to a degree by COVID-19 rules and fears of another wave of infections—have now been joined by fears of protest and violent events in many U.S. cities. So gasoline consumption, although always highest in summer months, is doubly handicapped.
The raw resource, crude oil, took heart and rose ahead of the June 6 OPEC agreement with cooperating nations to extend the oil production cutback. West Texas Intermediate's near-month futures contract closed at $39.55 per barrel on June 5. But the cutback extension turned out to be merely through July. After that Saturday OPEC decision came Monday and a lower price followed by further price retreat to close at $36.26 per barrel on June 12.
With both crude oil and gasoline supply now even higher and imposing downward price pressure, recent pump price resurgence does not seem likely to continue at this rate.
The puncturing of demand continues to hurt U.S. refiners, whose aggregate refining capacity utilization has edged up some, but is still a terrible 73.1%. Retailers, meanwhile, lost another penny of gasoline margin, to a U.S. average 28.18 CPG on June 12.
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Trilby Lundberg is publisher of the Lundberg Survey of U.S. fuel markets.