By LYNN DOAN
Retail gasoline in the US slid to the lowest level in almost
four months as refineries boosted production.
Pump prices averaged $3.593/gal this week, down 4.2 cents
from the previous week and the lowest since March 31, data
posted on the Energy Information Administrations
website show. Gasoline was 2.4% below 2013 levels.
Travelers and commuters are seeing relief at the pumps as US
refiners process a record amount of crude oil. A production
boom from US shale formations and Canadian oil sands pushed
some domestic crudes down last month to multi-year seasonal
lows versus foreign grades. US and international benchmark
oil prices have retreated as production in Iraq has been
unaffected so far by unrest there.
Refineries are running really smoothly right now and
theyre making lots of gasoline, Michael Green, a
spokesman for Heathrow, Florida-based AAA, said by telephone
from Washington. Theres also a stalemate in Iraq
thats helped stabilize the markets because theres
less fear that rebels will disrupt oil production and
crude runs in the US
climbed to 16.6 million bpd in the week ended July 11, the
most in Energy Information Administration data going back to
1989, and plants operated at 93.8% of capacity, the highest
level since August 2005.
The surge in US plant rates narrowed gasolines crack
spread versus West Texas Intermediate crude on the New York
Mercantile Exchange, a rough measure of refining
profit, last week to
$17/bbl, the smallest in five months and the lowest
seasonally in four years. The gap was $17.77 on Tuesday. The
motor fuels premium to the international standard Brent
oil shrank to $11.89, before rebounding to $12.96.
Retail gasoline may drift down slowly by a few more
cents should refineries in the US continue to run at
high rates and hurricanes steer clear of the Gulf, Green
said. The six-month Atlantic storm season runs from June 1
through Nov. 30, with the statistical peak Sept. 10 and the
most activity from mid-August to mid-October.
The second tropical system of the season formed far east of
the Lesser Antilles island chain on Monday, the National
Hurricane Centers website shows.
The escalating tension between the West and Russia, the
fighting in the Gaza Strip, and the violence in Iraq will
temper the decline in the pump price, said Andy Lipow,
president of energy consulting firm Lipow Oil Associates in
Houston. Both Brent and WTI capped their first increases last
week in a month on the conflicts.
I expect the retail price to go down to about $3.55 a
gallon over the next week or so, Lipow said. Then
well have to see if these events overseas result in the
market turning around and costing the consumer more
In the US Midwest, crude demand surged 5.4% and refineries
used oil from North Dakota and Canada to run at a record
100.3% of normal operating capacity, EIA data show.
Those grades are getting cheaper relative to their
counterparts as hydraulic fracturing and horizontal drilling
help draw record volumes of crude out of shale formations.
The tight-oil boom has boosted domestic production to the
highest level since 1986, turning the US into the
worlds largest producer.
Western Canada Select, a heavy, sour blended crude, was
unchanged versus WTI at a $24.50/bbl discount, its lowest
level for this time of year since at least 2008, data
compiled by Bloomberg show. Oil from North
Dakotas booming Bakken shale formation was $7.80/bbl
This week, pump prices fell in all regions of the US, with
the biggest drop seen in the Gulf Coast region, where it
declined 4.6 cents to $3.394/gal. The smallest decrease was
in the Rocky Mountain area, which lost 0.4 cent to $3.64.
The EIA collects information from about 800 filling stations
as of 8 a.m. local time on Mondays.